Question

BFred is convinced that Apple will move significantly over the next two months but isn't sure whether it will go up or down. He therefore decides to initiate a straddle strategy where he buys an equal number of at the money put and call options (so that the strike price of the options equals the current share price). We have: The call option costs \$24.46 and the put option costs \$24.46. The trading costs per contract are \$1. The current share price of Apple is \$426.15. Question: If BFred buys a total of 4 contracts, what will his profit or loss be if Apple's share price is \$382.10 when the options expire? (assume that BFred exercises the in-the-money option and then immediately closes his position in the underlying; there is no cost to exercise the option while the closing of the position in the underlying costs \$1).

          BFred is convinced that Apple will move significantly over the next two months but isn't sure whether it will go up or down. He therefore decides to initiate a straddle strategy where he buys an equal number of at the money put and call options (so that the strike price of the options equals the current share price).
We have: The call option costs \$24.46 and the put option costs \$24.46. The trading costs per contract are \$1. The current share price of Apple is \$426.15.
Question: If BFred buys a total of 4 contracts, what will his profit or loss be if Apple's share price is \$382.10 when the options expire? (assume that BFred exercises the in-the-money option and then immediately closes his position in the underlying; there is no cost to exercise the option while the closing of the position in the underlying costs \$1).

BFred is convinced that Apple will move significantly over the next two months but isn't sure whether it will go up or down. He therefore decides to initiate a straddle strategy where he buys an equal number of at the money put and call options (so that the strike price of the options equals the current share price).
We have: The call option costs $24.46 and the put option costs $24.46. The trading costs per contract are $1. The current share price of Apple is $426.15.
Question: If BFred buys a total of 4 contracts, what will his profit or loss be if Apple's share price is $382.10 when the options expire? (assume that BFred exercises the in-the-money option and then immediately closes his position in the underlying; there is no cost to exercise the option while the closing of the position in the underlying costs $1).

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