Difficulty: Easy
Category: Options & Greeks
Practice quant interview questions from top firms including Jane Street, Citadel, Two Sigma, DE Shaw, and other leading quantitative finance companies.
Topics: options, collar, risk-management, profit-loss
You own 100 shares of a stock currently trading at 100 dollars. To protect against a potential downturn, you implement a collar strategy: You buy a put option with a strike price of 95 dollars and simultaneously sell a call option with a strike price of 105 dollars. Assume the net premium received (premium received from selling the call minus premium paid for buying the put) is 2 dollars. What are the maximum possible loss and maximum possible gain for this strategy? Consider only the price move
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