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Business, 07.05.2021 02:40 tyneshiajones124

A stock is trading at $58. You believe there is a 70% chance the price of the stock will increase by 10% over the next 3 months. You believe there is a 20% chance the stock will drop by 10%, and you think there is only a 10% chance of a major drop in price of 20%. At-the-money 3-month puts are available at a cost of $730 per contract. What is the expected dollar profit for a writer of a naked put at the end of 3 months?

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A stock is trading at $58. You believe there is a 70% chance the price of the stock will increase by...
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