Homework Answers
I will purchase a CALL option.
A call option gives the holder of the option to buy the stock at a predetermined price. This price is called the strike price. Profit on a call option will be Price minus strike. When the price rises above the strike price, call option will generate a profit. Therefore an option trader will hold a call option when he thinks the price is going to rice. Put option makes money when price of the stock falls below the strike price.
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1. If you think the price of stock (which you do not own) is going to...
The market price of Loblaw Corporation stock has been very volatile and you think this volatility...
The market price of Loblaw Corporation stock has been very volatile and you think this volatility will continue for a few weeks. Thus, you decide to purchase a 1-month call option contract with a strike price of $47 and an option price of $1.93. You also purchase a 1-month put option contract on the stock with a strike price of $47 and an option price of $1.28. What will be your total profit or loss on all the transactions related...
6. Suppose you believe that the price of Stock X is going to increase from its...
6. Suppose you believe that the price of Stock X is going to increase from its current level of $18 during the next several months. For $4 you buy a call option giving you the right to buy 1 share at a price of $24 per share. [12 points] a. What is the exercise value of the option now? X is going to increase from its curent level of 18 during b. What is the time value of the option?...
Suppose you believe that the price of Stock X is going to increase from its current...
Suppose you believe that the price of Stock X is going to increase from its current level of $18 during the next several months. For $4 you buy a call option giving you the right to buy 1 share at a price of $24 per share. d. Calculate the net profit percentage (rate of return) on the option. e. Calculate the breakeven price of the stock--the stock price that would produce neither a net profit nor a net loss for...
Now let's say you believe EFG stock will increase in price of $50 share. so you...
Now let's say you believe EFG stock will increase in price of $50 share. so you decide to purchase a lune Call option for 100 shares for a 30 day time limit. Assume that I call option contract equals to 100 shares and the call premium per share is $2/share. (6 points total) a) Are you the long call or short call option? are you the buyer or seller? b) How much will you spend for the entire call option...
The common stock of the P.U.T.T. Corporation has been trading in a narrow price range for...
The common stock of the P.U.T.T. Corporation has been trading in a narrow price range for the past month, and you are convinced it is going to break far out of that range in the next three months. You do not know whether it will go up or down, however. The current price of the stock is $115 per share, the price of a three-month call option with an exercise price of $115 is $8, and a put with the...
The common stock of the P.U.T.T. Corporation has been trading in a narrow price range for...
The common stock of the P.U.T.T. Corporation has been trading in a narrow price range for the past month, and you are convinced it is going to break far out of that range in the next three months. You do not know whether it will go up or down, however. The current price of the stock is $125 per share, the price of a three-month call option with an exercise price of $125 is $10, and a put with the...
please just do question 7. thank you Silicon MicroSystems, Inc. (SMSI) stock is currently selling for...
please just do question 7.
thank you
Silicon MicroSystems, Inc. (SMSI) stock is currently selling for $100 and the firm pays no dividends. The stock's volatility is 0.30 and the risk-free rate is 8%. Consider the following 6-month call and put options on SMSI stock (assume that contract size is 1 share): 6. Call 1 Call 2 Call 3 Strike $90 Price $12.817 $6.999 $3.380 Delta Gamma $100$110 0.7690.548 0.333 ma 0.0180.024 0.022 Put 1 90 Put 2 Put 3...
Question 5 (10 points) Suppose you believe that Du Pont's stock price is going to decline...
Question 5 (10 points) Suppose you believe that Du Pont's stock price is going to decline from its current level of $ 82.09 sometime during the next 5 months. For $ 717.05 you could buy a 5-month put option giving you the right to sell 100 shares at a price of $ 84 per share. If you bought a 100-share contract for $ 717.05 and Du Pont's stock price actually changed to $ 70.62 , your net profit (or loss)...
Suppose you buy 100 shares of Google stock which has a current price of $1,265.13 a...
Suppose you buy 100 shares of Google stock which has a current price of $1,265.13 a share. You want to ensure that you do not lose more than $200 a share. Which of the following option strategies would allow you to do this? A. A covered call B. A naked call C. A protective put D. You cannot ensure that you will not have losses with stocks Suppose I buy 100 shares of AMD and want to limit my losses...
RTF stock is currently priced at $2106 a share. The only options on this stock are...
RTF stock is currently priced at $2106 a share. The only options on this stock are the August $25 call on which is priced at $32, and the August $25 put which is priced at $3.98 Flo would like the option to purchase 500 wes of RTF should the price suddenly me as the expects Herman concern is that the price will double after hours and she will miss out on some potential profits. She also realizes the stock is...
6. Suppose you believe that the price of Stock X is going to increase from its current level of $18 during the next several months. For $4 you buy a call option giving you the right to buy 1 share at a price of $24 per share. [12 points] a. What is the exercise value of the option now? X is going to increase from its curent level of 18 during b. What is the time value of the option?...
Now let's say you believe EFG stock will increase in price of $50 share. so you decide to purchase a lune Call option for 100 shares for a 30 day time limit. Assume that I call option contract equals to 100 shares and the call premium per share is $2/share. (6 points total) a) Are you the long call or short call option? are you the buyer or seller? b) How much will you spend for the entire call option...
The common stock of the P.U.T.T. Corporation has been trading in a narrow price range for the past month, and you are convinced it is going to break far out of that range in the next three months. You do not know whether it will go up or down, however. The current price of the stock is $125 per share, the price of a three-month call option with an exercise price of $125 is $10, and a put with the...
please just do question 7.
thank you
Silicon MicroSystems, Inc. (SMSI) stock is currently selling for $100 and the firm pays no dividends. The stock's volatility is 0.30 and the risk-free rate is 8%. Consider the following 6-month call and put options on SMSI stock (assume that contract size is 1 share): 6. Call 1 Call 2 Call 3 Strike $90 Price $12.817 $6.999 $3.380 Delta Gamma $100$110 0.7690.548 0.333 ma 0.0180.024 0.022 Put 1 90 Put 2 Put 3...
Question 5 (10 points) Suppose you believe that Du Pont's stock price is going to decline from its current level of $ 82.09 sometime during the next 5 months. For $ 717.05 you could buy a 5-month put option giving you the right to sell 100 shares at a price of $ 84 per share. If you bought a 100-share contract for $ 717.05 and Du Pont's stock price actually changed to $ 70.62 , your net profit (or loss)...
RTF stock is currently priced at $2106 a share. The only options on this stock are the August $25 call on which is priced at $32, and the August $25 put which is priced at $3.98 Flo would like the option to purchase 500 wes of RTF should the price suddenly me as the expects Herman concern is that the price will double after hours and she will miss out on some potential profits. She also realizes the stock is...
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