Protecting a short position with options

[MarkedFeed]

Hi. This is my current situation.
I sell 100 shares of ABC Co. short at $80. Also, I buy a 70 call option for $5 to protect against the stock price going up.
1. If the stock ends up at $100, what will be my overall gain/loss?
2. If the stock ends up at $50, what will be my overall gain/loss?
3. What is the most I can lose under this short sale-call option plan?
4. If I have an unprotected short sell position (no call option), what is the most I can lose?
5. Under the condition described in part (4), if I had a limit order to buy the stock and close down the position at $60, what is the most I could lose?

Thanks all for leaving me your solution.


Read more...