Garner Money Management Inc., is in charge of a $50 million portfolio. Its beta is equal to the market. To hedge its position it writes 200 December 1100 call options contracts on the S&P 500 Stock Index priced at $74 per contract. It also buys 300 December 1100 put option contracts on the same index for $31 per contract. Instead of going down, the market and the portfolio go up by 10% and the S&P 500 Index ends at 1263.
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Consider the change in the portfolio value and the gains or losses on the call and put options. Recall that option contracts trade in units of 100. What is the overall net gain or loss of Garner Money Management as a result of the changes in the market?