Draw the payoff picture at expiration for a long position in a call option that has a premium of $1.75 and a strike price of $55.
Payoff of a long call option = Max[S-X, 0] - P
= underlying price at expiry,
X = strike price
P = premium paid .
Draw the payoff picture at expiration for a long position in a call option that has...
Draw the payoff picture at expiration for a long position in a put option that has a premium of $2.50 and a strike price of $65.
A call option on a stock has an exercise price of $22.25. If the stock price at expiration is $25, what is the option payoff for a long call position? A. $22.25 B. $25 C. −$2.75 D. $0 E. $2.75
Problem 6. A portfolio contains a long position in a call option with strike price $50, a short position in a call option with strike price $45, a long position in a call option with strike price $35, a short position in a call option with strike price S30. All the options are on the same stock and have the same expiration time. Find a formula for the value of the portfolio, V (S, t). Construct the pay-off function
Chapter 10 - Mechanics of Options Markets 1-Calculate the payoff at expiration for a call option on the S&P 100 stock index in which the underlying price is 623.22 at expiration, the multiplier is 100, the strike price is: k a) 475 k b) 750
A European call option has a strike price of $20 and an expiration date in six months. The premium for the call option is $5. The current stock price is $25. The risk-free rate is 2% per annum with continuous compounding. What is the payoff to the portfolio, short selling the stock, lending $19.80 and buying a call option? (Hint: fill in the table below.) Value of ST Payoff ST ≤ 20 ST > 20 How much do you pay...
What is the maximum payoff that a long put option can have? How about a long call option? What is the maximum payoff that a long put option can have? O A. Twice the difference of the price of the put at the time of purchase and the strike price O B. The stock price at the time of purchase O C. The strike price O D. There is no maximum payoff for a long put option. What is the...
You have taken a long position in a call option on IBM common stock. The option has an exercise price of $147 and IBM's stock currently trades at $152. The option premium is $6 per contract. a. How much of the option premium is due to intrinsic value versus time value? Option Premium Intrinsic value $ Time value b. What is your net profit on the option if IBM’s stock price increases to $162 at expiration of the option and...
You have taken a long position in a call option on IBM common stock. The option has an exercise price of $144 and IBM's stock currently trades at $148. The option premium is $6 per contract. a. How much of the option premium is due to intrinsic value versus time value? b. What is your net profit on the option if IBM’s stock price increases to $158 at expiration of the option and you exercise the option? c. What is...
Please explain the answer or steps. Thank you. 21. You write a call option with X S55 and buy a call with X $65. The options are on the same stock and have the same expiration date. One of the calls sells for $3; the other sells for $9. What is the break-even point for this strategy? A) $55 B) $60 CS61 (Ans: Higher the strike, lower the price of the call. Because S55 strike pays over [55 to infinity]...
Option Strategies 4 A call option expiring in two months has a strike price of $105.00 and is trading at a premium of c=$3.97. A put option expiring in two months has a strike price of $95.00 and is trading at a premium of p=$1.48. Find the lower expiration-date stock price at which a long strangle would break even.