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The market price of ZYX stock has been volatile and you expectthat volatility to continue

The market price of ZYX stock has been volatile and you expectthat volatility to continue

The market price of ZYX stock has been volatile and you expectthat volatility to continue for a few weeks based on recent news.Due to this belief you decide to purchase calls and puts to manageyour exposure. You purchase a one-month call option with a strikeprice of $25 and an option price of $1.10. You also purchase aone-month put option with a strike price of $25 and an option priceof $0.40. What will be your total profit or loss on these optionpositions if the stock price is $28.0 on the day the optionsexpire?

A. $300

B. -$150

C. $150

Abhinav 02-Dec-2019

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