Business, 03.05.2021 16:50 nickname0097

You would like to hold a protective put position on the stock of Picard Enterprise to lock in a guaranteed minimum value of $50 at year-end. Picard Enterprise currently sells for $50. Let's assume that one knows for sure that the stock price will increase by 10% or decrease by 10% over the next year. Unfortunately, no put options are traded on Picard Enterprise. What portfolio position in stock and T-bills will ensure you a payoff equal to the payoff that would be provided by a protective put portfolio (stock plus put with strike X = $50)?

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