Strategy 1- Protective put with option strike of $95
Strategy 2 Covered Call using an option with a strike of $105.00
Strategy 3 Bear Spread using put options with $90.00 and $100.00 strikes
The question also provided option prices
The question asked , if the Mountain Hawk stock declines to $88.00, which dericatives strategy will most likely give the highest value at expiration.
If anyone has done this question, the answer givn was C.
Please explain why in calculating the VALUE AT EXPIRATION, we are taking account the option premiums.