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Shares of XYZ are currently trading at $19.29 per share. You open a long straddle position...
Shares of XYZ are currently trading at $19.29 per share. You open a butterfly spread position...
Shares of XYZ are currently trading at $19.29 per share. You open a butterfly spread position because you believe the stock price will remain stable for the next month. You long a $3.40 call option with a strike price of $16.00. You short two $0.92 call options with a strike price of $19.00. You long a $0.09 call option with a strike price of $22.00. If at maturity, XYZ shares are trading at $17.00 per share, what is the final...
QUESTION 14 You expect that the stock of GoPro, currently trading at $73 per share, will...
QUESTION 14 You expect that the stock of GoPro, currently trading at $73 per share, will be volatile in the next three months, and the price will change significantly. However, you do not know the direction of the change. Thus, you decide to enter into a long straddle position using 3 month options, buying both a put and a call contract struck at $73. The premium on both options is $2.4 per share. If at maturity, GoPro is trading at...
QUESTION 1 Today you are writing a put option on TSLA stock, which is currently valued at $200 per share. The put optio...
QUESTION 1 Today you are writing a put option on TSLA stock, which is currently valued at $200 per share. The put option has a strike price of $178, 6 months to expiration, and currently trades at a premium of $6.1 per share. If at maturity the stock is trading at $164, what is your net profit on this position? Keep in mind that one option Covers 100 shares. QUESTION 2 Today you go long on 5 December contracts of...
XYZ stock is trading at $120 per share, and the company will not pay any dividends...
XYZ stock is trading at $120 per share, and the company will not pay any dividends over the next year. Consider an XYZ European call option and a European put option, both having an exercise price of $124 and both maturing in exactly one year. The simple (annualized) interest rate for borrowing and lending between now and one year from now is 3% for each 6 month period (6.09% per year). Assume that there are no arbitrage opportunities. Is there...
A long straddle is an option strategy in which the investor buys a call option and...
A long straddle is an option strategy in which the investor buys a call option and a put option with the same strike price and the same expiration date. If the strike is $40/share and the premiums for the call and the put are $4/share and $3/share respectively. Draw the profit loss diagram for the long straddle strategy. Repeat problem 1 for a short straddle (i.e. write a call and write a put).
A trader creates a long strangle with put options with a strike price of $160 per...
A trader creates a long strangle with put options with a strike price of $160 per share, and call options with a strike price of $170 per share by trading a total of 20 option contracts (10 put contracts and 10 call contracts). Each contract is written on 100 shares of stock. The put option is worth $18 per share, and the call option is worth $15 per share. What is the value (payoff) of the strangle at maturity as...
A trader creates a long strangle with put options with a strike price of $160 per...
A trader creates a long strangle with put options with a strike price of $160 per share, and call options with a strike price of $170 per share by trading a total of 20 option contracts (10 put contracts and 10 call contracts). Each contract is written on 100 shares of stock. The put option is worth $18 per share, and the call option is worth $15 per share. What is the value (payoff) of the strangle at maturity as...
Wesley Corp. stock is trading for $ 30 per share. Wesley has 24 million shares outstanding...
Wesley Corp. stock is trading for $ 30 per share. Wesley has 24 million shares outstanding and a market debt-equity ratio of 0.49. Wesley's debt is zero coupon debt with a 5-year maturity and a yield to maturity of 8 %EAR (effective annual rate). a. Describe Wesley's equity as a call option. What is the maturity of the call option? What is the market value of the asset underlying this call option? What is the strike price of this call...
Suppose that XYZ currently is trading at $20 per share. You buy 1,000 shares using $15,000...
Suppose that XYZ currently is trading at $20 per share. You buy 1,000 shares using $15,000 of your own money, borrowing the remainder of the purchase cost from your broker. The rate on the margin loan is 8%. a) What is your rate of return if the price of XYZ immediately changes to $22? b) With the same information on stock XYZ and your initial margin above, assume a year has passed. How low can XYZ's price per share fall...
Koka Kola common stock is currently trading for $29 per share. A put option on the...
Koka Kola common stock is currently trading for $29 per share. A put option on the stock with a strike price of $32 that expires in 334 days is selling for $3.76. A call option on the stock with a strike price of $32 that expires in 334 days is currently trading for $1.99. What is the exercise value of the put option? (Rounded to the nearest cent.) $ What is the put option's time premium? (Rounded to the nearest...
Shares of XYZ are currently trading at $19.29 per share. You open a butterfly spread position because you believe the stock price will remain stable for the next month. You long a $3.40 call option with a strike price of $16.00. You short two $0.92 call options with a strike price of $19.00. You long a $0.09 call option with a strike price of $22.00. If at maturity, XYZ shares are trading at $17.00 per share, what is the final...
QUESTION 14 You expect that the stock of GoPro, currently trading at $73 per share, will be volatile in the next three months, and the price will change significantly. However, you do not know the direction of the change. Thus, you decide to enter into a long straddle position using 3 month options, buying both a put and a call contract struck at $73. The premium on both options is $2.4 per share. If at maturity, GoPro is trading at...
QUESTION 1 Today you are writing a put option on TSLA stock, which is currently valued at $200 per share. The put option has a strike price of $178, 6 months to expiration, and currently trades at a premium of $6.1 per share. If at maturity the stock is trading at $164, what is your net profit on this position? Keep in mind that one option Covers 100 shares. QUESTION 2 Today you go long on 5 December contracts of...
Koka Kola common stock is currently trading for $29 per share. A put option on the stock with a strike price of $32 that expires in 334 days is selling for $3.76. A call option on the stock with a strike price of $32 that expires in 334 days is currently trading for $1.99. What is the exercise value of the put option? (Rounded to the nearest cent.) $ What is the put option's time premium? (Rounded to the nearest...
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