The Black, Scholes and Merton option pricing model assumes the stock price changes are lognormally distributed.
Then, How to show graphically
- How this distribution changes when
1a)an investor or/and trader is long the stock and long the put?
1b)an investor or/and trader is long the stock and short the call?
How to answer this question? I know the stock price changes are distributed lognormally.
Any hint or even correct answer to both these questions will be accepted.