Homework Answers
Answer: False.
In a put option, the writer of the option gives money to the purchaser when the share price falls down below strike price.
The maximum loss which the writer of the put option can have is the strike price.
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Question 1 (1 point) The maximum loss for writing a put option is infinity. True False
Question 2 (1 point) Saved The potential loss for writing a short (or naked) call option...
Question 2 (1 point) Saved The potential loss for writing a short (or naked) call option in infinite. True False
What are the maximum gain and maximum loss to a trader that buys a put option?
What are the maximum gain and maximum loss to a trader that buys a put option?
Q2. The maximum loss from writing a call option is limited but the maximum gain is...
Q2. The maximum loss from writing a call option is limited but the maximum gain is not. 2 points Your answer
• Profit/loss for buyers/sellers of call option/put option Breakeven for call option/put option An investor bought...
• Profit/loss for buyers/sellers of call option/put option Breakeven for call option/put option An investor bought 1 XYZ March 30 call for 3. o What is the breakeven point? 3043-33 o What is the initial investment of this strategy? 300 o What is the profit/loss if XYZ trades for 25 at expiration? o What is the profit/loss if XYZ trades for 35 at expiration? o What is the max. profit? P *LP o What is the max. loss? Premium
QUESTION 1 Today you are writing a put option on TSLA stock, which is currently valued...
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 $187, 6 months to expiration, and currently trades at a premium of $4.8 per share. If at maturity the stock is trading at $150, what is your net profit on this position? Keep in mind that one option covers 100 shares.
1. There is a put option for Euros with a strike price of $1.22 and a...
1. There is a put option for Euros with a strike price of $1.22 and a premium of $.06. There is another put option for Euros with a strike price of $1.16 and a premium of $0.03. You are slightly pessimistic about the Euro and decide to utilize a bear spread using these two put options. a) Please draw the contingency graph and identify the maximum gain and loss as well as the breakeven point. b) Assuming the resulting spot...
True or False 1.An option buyer exercises only if his profit is positive. 2.An option buyer...
True or False 1.An option buyer exercises only if his profit is positive. 2.An option buyer will not exercise if doing so results in a loss (i.e. if her overall profit is negative). 3.A writer of a put option exercises if her payoff is positive. 4.American options are traded in the US, while European options are traded in Europe. 5.The sum of a call buyer’s profit and a call seller’s profit is always positive. 6.The sum of put buyer and...
Bluefish has a put option that trades with a strike price of $76. The put option...
Bluefish has a put option that trades with a strike price of $76. The put option premium is $11. Determine the profit/loss on WRITING one Bluefish put option if at the option's expiration the stock price is $51. Place your answer with dollars and cents without a dollar sign. Enter negative answers with a "minus" sign. For example, if your answer is negative two dollars and seventy five cents, then enter -2.75.
Question 7: 1. Both a call option and a put option are currently traded on stock...
Question 7:
1. Both a call option and a put option are currently traded on stock AXT. Both options have a strike price of $90 and maturity (T) of three months. The call premium (Co) is $2.75, the put premium (Po) is $4.12, and the underlying stock price (So) is $89.50. Assume that you trade one contract that has 100 shares when you calculate profit or loss. What will be your profit (or loss) if you take a long position...
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...
Question 2 (1 point) Saved The potential loss for writing a short (or naked) call option in infinite. True False
Q2. The maximum loss from writing a call option is limited but the maximum gain is not. 2 points Your answer
• Profit/loss for buyers/sellers of call option/put option Breakeven for call option/put option An investor bought 1 XYZ March 30 call for 3. o What is the breakeven point? 3043-33 o What is the initial investment of this strategy? 300 o What is the profit/loss if XYZ trades for 25 at expiration? o What is the profit/loss if XYZ trades for 35 at expiration? o What is the max. profit? P *LP o What is the max. loss? Premium
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 $187, 6 months to expiration, and currently trades at a premium of $4.8 per share. If at maturity the stock is trading at $150, what is your net profit on this position? Keep in mind that one option covers 100 shares.
Bluefish has a put option that trades with a strike price of $76. The put option premium is $11. Determine the profit/loss on WRITING one Bluefish put option if at the option's expiration the stock price is $51. Place your answer with dollars and cents without a dollar sign. Enter negative answers with a "minus" sign. For example, if your answer is negative two dollars and seventy five cents, then enter -2.75.
Question 7:
1. Both a call option and a put option are currently traded on stock AXT. Both options have a strike price of $90 and maturity (T) of three months. The call premium (Co) is $2.75, the put premium (Po) is $4.12, and the underlying stock price (So) is $89.50. Assume that you trade one contract that has 100 shares when you calculate profit or loss. What will be your profit (or loss) if you take a long position...
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...
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