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1. A covered call (a long stock + a short call) An investor purchases a MCD...
ASAP! Let's create four P&L functions that describe the following trading strategies. Fill all the values...
ASAP!
Let's create four P&L functions that describe the following trading strategies. Fill all the values and answer simple questions in the Excel template as attached. (Hint: Once you have filled in all the values correctly in the excel file, you can replicate all the plots as in LN 4 (pp. 19) automatically. 1. A covered call (a long stock + a short call) An investor purchases a MCD stock at $35.50 and she immediately shorts a 40 call MCD...
An investor creates a covered call position by purchasing 100 shares of the Tesla stock at...
An investor creates a covered call position by purchasing 100 shares of the Tesla stock at a price of $340 per share and selling 100 call options on the Tesla stock with a strike price $340 per share. The premium of the option is $15 per share. At which stock price at the maturity of the option will the investor break even? Please provide your answer in unit of dollars, rounded to the nearest cent.
25. You buy a call option on Boeing Corp with an exercise price of $40 and...
25. You buy a call option on Boeing Corp with an exercise price of $40 and an expiration date in September, and you write a call option on Boeing Corp with an exercise price of $40 and an expiration date in October. This strategy is called a A. Time spread B. Long straddle C. Short straddle D. Money spread E. None of the above 26. The maximum loss a buyer of a stock's call option can suffer is A. The...
questions 25-28 please 25. You buy a call option on Boeing Corp with an exercise price...
questions 25-28 please
25. You buy a call option on Boeing Corp with an exercise price of $40 and an expiration date in September, and you write a call option on Boeing Corp with an exercise price of $40 and an expiration date in October. This strategy is called a A. Time spread B. Long straddle C. Short straddle D. Money spread E. None of the above 26. The maximum loss a buyer of a stock's call option can suffer...
A long straddle is an option strategy in which the investor buys a call option and...
A long straddle is an option strategy in which the investor buys a call option and a put option with the same strike price and the same expiration date. If the strike is $40/share and the premiums for the call and the put are $4/share and $3/share respectively. Draw the profit loss diagram for the long straddle strategy. Repeat problem 1 for a short straddle (i.e. write a call and write a put).
1. Elementary Option Trading Strategies (Covered call writing and Floors) Suppose an investor owns 100,000 shares...
1. Elementary Option Trading Strategies (Covered call writing and Floors) Suppose an investor owns 100,000 shares of IBM stock at $120 per share. If the investor expects no large price rise and possible drop in price, he or she) sells 100,000 December 125 call option at $7, receiving $700,000. a. (5 points) If IBM stock drops only slightly from $120 to $113, what is the profit associated with the covered call writing strategy? b. (5 points) If IBM stock rises...
Question 11 help Thanks 11) An investor purchases an ABC 60 call for $1.50 in January with March expiration. Followi...
Question 11 help Thanks
11) An investor purchases an ABC 60 call for $1.50 in January with March expiration. Following a stock price increase in February, ABC 60 calls are trading for $7.50, ABC 70 calls are trading for $2.00, and ABC 70 puts are trading for $2.00. All option contracts cover 100 shares and have March expiration. As a follow-up strategy in February, the investor sells an ABC 60 call for $7.50 and purchases three ABC 70 calls at...
Charleston Investment Company just purchased Renfro stock for $50. It engages in a covered call strategy...
Charleston Investment Company just purchased Renfro stock for $50. It engages in a covered call strategy whereby it sells call options on Renfro stock. A call option on Renfro stock is available with an exercise price of $52, a one-year expiration date, and a premium of $2. Assume that the buyers of the call option will exercise the option on the expiration date if it is feasible to do so. Charleston will sell the stock at the end of one...
Which of the following combinations have similarly shaped profit/loss diagrams? Covered Call vs. a short stock...
Which of the following combinations have similarly shaped profit/loss diagrams? Covered Call vs. a short stock combined with a long call long put option combined with a long call option vs. protective put long call option combined with a short put option vs. long a stock None of those above
30. An investor constructs a long straddle by buying an April $30 call for $4 and...
30. An investor constructs a long straddle by buying an April $30 call for $4 and buying an April put $30 for $3. If the price of the underlying shares is $27 at expiration, what is the profit on the position? a. -$4 b. -$2 c. $2 d. $3 31. Consider an option strategy where an investor buys one call option with an exercise price of $55 for $7, sells two call options with an exercise price of $60 for...
ASAP!
Let's create four P&L functions that describe the following trading strategies. Fill all the values and answer simple questions in the Excel template as attached. (Hint: Once you have filled in all the values correctly in the excel file, you can replicate all the plots as in LN 4 (pp. 19) automatically. 1. A covered call (a long stock + a short call) An investor purchases a MCD stock at $35.50 and she immediately shorts a 40 call MCD...
25. You buy a call option on Boeing Corp with an exercise price of $40 and an expiration date in September, and you write a call option on Boeing Corp with an exercise price of $40 and an expiration date in October. This strategy is called a A. Time spread B. Long straddle C. Short straddle D. Money spread E. None of the above 26. The maximum loss a buyer of a stock's call option can suffer is A. The...
questions 25-28 please
25. You buy a call option on Boeing Corp with an exercise price of $40 and an expiration date in September, and you write a call option on Boeing Corp with an exercise price of $40 and an expiration date in October. This strategy is called a A. Time spread B. Long straddle C. Short straddle D. Money spread E. None of the above 26. The maximum loss a buyer of a stock's call option can suffer...
1. Elementary Option Trading Strategies (Covered call writing and Floors) Suppose an investor owns 100,000 shares of IBM stock at $120 per share. If the investor expects no large price rise and possible drop in price, he or she) sells 100,000 December 125 call option at $7, receiving $700,000. a. (5 points) If IBM stock drops only slightly from $120 to $113, what is the profit associated with the covered call writing strategy? b. (5 points) If IBM stock rises...
Question 11 help Thanks
11) An investor purchases an ABC 60 call for $1.50 in January with March expiration. Following a stock price increase in February, ABC 60 calls are trading for $7.50, ABC 70 calls are trading for $2.00, and ABC 70 puts are trading for $2.00. All option contracts cover 100 shares and have March expiration. As a follow-up strategy in February, the investor sells an ABC 60 call for $7.50 and purchases three ABC 70 calls at...
Which of the following combinations have similarly shaped profit/loss diagrams? Covered Call vs. a short stock combined with a long call long put option combined with a long call option vs. protective put long call option combined with a short put option vs. long a stock None of those above
30. An investor constructs a long straddle by buying an April $30 call for $4 and buying an April put $30 for $3. If the price of the underlying shares is $27 at expiration, what is the profit on the position? a. -$4 b. -$2 c. $2 d. $3 31. Consider an option strategy where an investor buys one call option with an exercise price of $55 for $7, sells two call options with an exercise price of $60 for...
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