A new security on AT&T will entitle the investor to all dividends on AT&T over the next three years, limit upside potential to 20%, but also provide downside protection below 10%. AT&T stock is trading at $50, and three-year call and put options are traded on the exchange at the following prices
|
Call Options |
Put Options |
|||
|
K |
1 year |
3 year |
1 year |
3 year |
|
45 |
$8.69 |
$13.34 |
$1.99 |
$3.55 |
|
50 |
$5.86 |
$10.89 |
$3.92 |
$5.40 |
|
55 |
$3.78 |
$8.82 |
$6.59 |
$7.63 |
|
60 |
$2.35 |
$7.11 |
$9.92 |
$10.23 |
How much would you be willing to pay for this security?