10a | Cash inflow for selling PUT at strike 170 | $10.55 | (Bid) | |||||
Cash out flow for Buying PUT at strike 175 | ($14.00) | (Ask) | ||||||
NET FLOW | ($3.45) | |||||||
b | Payoff from Buying Put at 175: | |||||||
Price at expiration =S | ||||||||
Payoff=Max((175-S),0) | ||||||||
Payoff from Selling Put at 170: | ||||||||
Price at expiration =S | ||||||||
Payoff=Min((S-170),0) | ||||||||
Maximum Payoff from Bear Spread=(175-170) | $5 | |||||||
Maximum Profit from Bear Spread=$5-$3.45 | $1.55 | |||||||
c | Minimum Payoff from the bear spread:S>$175 | $0 | ||||||
Minimum Profit from the bear spread=$0-$3.45 | ($3.45) | |||||||
d | Break Even Point , where Payoff =$3.45 | |||||||
Break even point =175-3.45 | $171.55 | |||||||
e | If Price at expiration=$172.25 | |||||||
Payoff =175-172.25= | $2.75 | |||||||
Profit =2.75-3.45 | -$0.70 | |||||||
Please Note: | ||||||||
As Per HOMEWORKLIB RULES, in order to optimizes resources, only one question need to be answered | ||||||||
10. Use the options prices for Spotify in the EXCEL FILE to create a bear spread...
A trader creates a long butterfly spread from put options with strike prices of $160, $170, and $180 per share by trading a total of 20 option contracts (5 contracts at $160, 10 contracts at $170 and 5 contracts at $180). Each contract is written on 100 shares of stock. The options are worth $22, $28, and $36 per share of stock. What is the value (payoff) of the butterfly spread at maturity as a function of the then stock...
A trader creates a long butterfly spread from put options with strike prices of $160, $170, and $180 per share by trading a total of 20 option contracts (5 contracts at $160, 10 contracts at $170 and 5 contracts at $180). Each contract is written on 100 shares of stock. The options are worth $22, $28, and $36 per share of stock. What is the value (payoff) of the butterfly spread at maturity as a function of the then stock...
The table below gives today’s prices of six-month European put and call options written on a share of ABC stock at different strike prices. The stock does not pay a dividend and the risk-free interest rate is 0% per annum. Call Price ($) Strike Price ($) Put Price ($) 13.1 105 8.2 9.7 110 9.7 7.9 115 12.9 Using call options with strike prices of 105 and 110, create a bear spread and show in a table the profit of the...
Suppose that call options on a stock with strike prices $25 and $35 cost $7 and $2, respectively. How can the options be used to create (a) a bull spread and (b) a bear spread? Construct a table that shows the profit and payo↵ for both spreads.
Show work for: Mary is creating a butterfly spread using the following 3 call options. Strike Price Call Option Price A $90 $21.33 B $100 $11.18 C $110 $5.90 Calculate her initial cash flow of butterfly spread. If it's a cash inflow, enter a positive number. If it's a cash outflow, enter a negative number.
A trader creates a long butterfly spread from put options with strike prices of $90, $100, and $110 per share by trading a total of 40 option contracts (buy 10 contracts struck at $90, sell 20 contracts struck at $100 and buy 10 contracts struck at $110). Each contract is written on 100 shares of stock. The options are worth $18, $24, and $32 per share of stock. What is the value of the butterfly spread at maturity as a...
Suppose that European call options with strike prices $30, $35, and $40 cost $7, $4, and $2, respectively. What is the upfront cash flow of creating a butterfly spread using these three call options?
NEED HELP!!! 6. You create a bull spread by buying a call with a strike price of $26 and selling a call with strike price of $32. The prices of calls are $5 and $2 respectively. What is the net payoff from your position if the stock price is $55 at the expiration of the options? A. $1
Suppose that European call options with strike prices $30, $35, and $40 cost $7, $4, and $2, respectively. What is the upfront cash flow of creating a butterfly spread using these three call options? -$13 -$5 -$1 -$3
the cash price of a one year treasury bill is 95 per 100 of face value. a 2 year bond with a face value of 100usd that pays annual coupons of 8. The table below gives today's prices of six-month European put and call options written on a share of ABC stock at different strike prices. The stock does not pay a dividend and the risk-free interest rate is 0% per annum. Put Price (S) Call Price (S) 13.1 9.7...