Homework Answers
A) maximum profit = 40 - 38 = $2
maximum loss = 38 - 35 = $3
B)
This is the zero collar
strategy which combines covered call and protective put , both
having same premium.
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7. You buy shares of Simon Property Group (SPG) for $38. Simultaneously with the stock purchase,...
The current stock price of RWJ is $312.32. You have the following quotes on RWJ options:...
The current stock price of RWJ is $312.32. You have the following quotes on RWJ options: Expiration Exercise Price Calls Puts Dec 305 27.40 8.25 Jan 310 18.43 14.15 Feb 315 19.55 20.00 May 320 25.55 30.40 a. Which of the options are in the money? b. What is the exercise value of a February call option with a strike price of $315? c. Suppose you buy 10 contracts of the February 315 call option. How much will you pay,...
1. You buy a stock for $50 per share and simultaneously buy a put with a...
1. You buy a stock for $50 per share and simultaneously buy a put with a $50 strike price and a $1.00 premium. If the stock price falls to $45 per share, what is your per-share net profit from this investment position? If you think net profit is negative, enter your answer using a number preceded by a minus sign. If you think net profit is positive, enter your answer as a number. 2. You buy a stock for $50...
Suppose that you buy a share of stock for 28 dollars, you sell one call for...
Suppose that you buy a share of stock for 28 dollars, you sell one call for 2 dollars, and you buy three puts for 7 dollars each. Assume that all the options have a strike price of 46 dollars, and the same expiration date. If the stock price on the expiration date is 41 dollars, what is your total profit?
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...
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...
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]...
Use the option quote information shown here to answer the questions that follow. The stock is...
Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $43. Calls Puts Strike Option Expiration Price Vol. Last Vol. Last Macrosoft Feb 45 101 1.83 56 2.83 Mar 45 77 2.07 38 3.24 May 45 38 2.35 27 3.66 Aug 45 19 2.56 19 3.70 a. Suppose you buy 26 contracts of the February 45 call option. How much will you pay, ignoring commissions? Cost $ ...
Use the option quote information shown here to answer the questions that follow. The stock is...
Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $43 Calls Puts Strike Vol 101 Vol 56 38 27 19 Last 2.83 3.24 3.66 3.70 Option Expiration Price Macrosoft Feb Mar May Aug 45 45 45 45 Last 1.83 2.07 2.35 2.56 38 19 a. Suppose you buy 26 contracts of the February 45 call option. How much will you pay, ignoring commissions? Answer is complete and correct. Cost 4,758...
Use the option quote information shown here to answer the questions that follow. The stock is...
Use the option quote information shown here to answer the
questions that follow. The stock is currently selling for $114, and
the size of each contract is 100 shares.
a. Suppose you buy 10 contracts of the
February 110 call option. How much will you pay, ignoring
commissions?
b-1. Suppose you buy 10 contracts of
the February 110 call option and also suppose that Macrosoft stock
is selling for $140 per share on the expiration date. How much is
your...
The current price of the Gilead stock is $77 per share. Consider an option strategy, which...
The current price of the Gilead stock is $77 per share. Consider an option strategy, which consists of following positions: Selling one put option on the Gilead stock with the strike price of $75. The price of this put option is $3.44. Buying one put option on the Gilead stock with the strike price of $72. The price of this option is $2.24. Buying one call option on the Gilead stock with the strike price of $81. The price of...
g) European call with a strike price of $40 costs $7. European put with the same...
g) European call with a strike price of $40 costs $7. European put with the same strike price and expiration date costs $6. Assume that you buy two calls and one put (strap strategy). Sketch the graph and write down functions of payoff and profit h) Consider a stock with a price of $50 and there is European put option on that stock with the strike of $55 and premium of $4. Assume that you buy 1/3 of a stock...
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]...
Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $43 Calls Puts Strike Vol 101 Vol 56 38 27 19 Last 2.83 3.24 3.66 3.70 Option Expiration Price Macrosoft Feb Mar May Aug 45 45 45 45 Last 1.83 2.07 2.35 2.56 38 19 a. Suppose you buy 26 contracts of the February 45 call option. How much will you pay, ignoring commissions? Answer is complete and correct. Cost 4,758...
Use the option quote information shown here to answer the
questions that follow. The stock is currently selling for $114, and
the size of each contract is 100 shares.
a. Suppose you buy 10 contracts of the
February 110 call option. How much will you pay, ignoring
commissions?
b-1. Suppose you buy 10 contracts of
the February 110 call option and also suppose that Macrosoft stock
is selling for $140 per share on the expiration date. How much is
your...
g) European call with a strike price of $40 costs $7. European put with the same strike price and expiration date costs $6. Assume that you buy two calls and one put (strap strategy). Sketch the graph and write down functions of payoff and profit h) Consider a stock with a price of $50 and there is European put option on that stock with the strike of $55 and premium of $4. Assume that you buy 1/3 of a stock...
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