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1 December, 19:43

You buy one Home Depot June 60 call contract and one June 60 put contract. The call premium is $5 and the put premium is $3. Your maximum loss from this position could be a. $300. b. $800. c. None of the options are correct. d. $200. $500.

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  1. 1 December, 21:52
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    b. $800

    Explanation:

    The calculation of maximum loss from this position is shown below:-

    Maximum Loss from this position = (Assume figure * Call premium) + (Assume figure * Put premium)

    = (100 * $5) + (100 * $3)

    = $500 + $300

    = $800

    Therefore for computing the maximum loss from this position we simply applied the above formula.
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