Homework Answers
| The Seller of 1180 Put: | |||||||||
| Payoff=1160-1180=-$20 per ounce | |||||||||
| Amount received for selling put=$15.20 | |||||||||
| Net Loss =20-15.20=$4.80 | |||||||||
| Break Even Price Per Ounce: | |||||||||
| 1180-15.2=$1164.8 | |||||||||
| Potential Maximum Loss=Infinite | |||||||||
| Potential Maximum Gain=$15.20 | |||||||||
| The Buyer of 1180 Put: | |||||||||
| Payoff=1180-1160=-$20 per ounce | |||||||||
| Amount paid for buying put=$15.20 | |||||||||
| Net gain =20-15.20=$4.80 | |||||||||
| Break Even Price Per Ounce: | |||||||||
| 1180-15.2=$1164.8 | |||||||||
| Potential Maximum Loss=$15.20 | |||||||||
| Potential Maximum Gain=Infinite | |||||||||
| The Seller of 1180 CALL: | |||||||||
| Payoff=$0 | |||||||||
| Amount received for selling CALL=$24.10 | |||||||||
| Net Gain=$24.10 | |||||||||
| Break Even Price Per Ounce: | |||||||||
| 1180+24.10=$1204.10 | |||||||||
| Potential Maximum Loss=Infinite | |||||||||
| Potential Maximum Gain=$24.10 | |||||||||
| The Buyer of 1180 CALL: | |||||||||
| Payoff=$0 | |||||||||
| Amount paid for buying CALL=$24.10 | |||||||||
| Net Loss=$24.10 | |||||||||
| Break Even Price Per Ounce: | |||||||||
| 1180+24.10=$1204.10 | |||||||||
| Potential Maximum Loss=$24.10 | |||||||||
| Potential Maximum Gain=Infinite | |||||||||
| Initial position | Net Gain/(Loss) at $1160 | Break even Price per ounce | Potential Max. gain per ounce | Potential Max. Loss per ounce | |||||
| A Long Position in 1188 futures: | The Seller of 1180 Put | ($4.80) | $1,164.80 | $15.20 | Infinite | ||||
| Loss =1188-1160=$28 | The Buyer of 1180 Put | $4.80 | $1,164.80 | Infinite | $15.20 | ||||
| Breakeven Price =$1188 | The Seller of 1180 CALL | $24.10 | $1,204.10 | $24.10 | Infinite | ||||
| Potential gain =Infinite | The Buyer of 1180 CALL | ($24.10) | $1,204.10 | Infinite | $24.10 | ||||
| Potential Loss =Infinite | A Long Position in 1188 futures | ($28) | $1,188 | Infinite | Infinite | ||||
| A Short Position in 1188 futures | $28 | $1,188 | Infinite | Infinite | |||||
| A Short Position in 1188 futures: | |||||||||
| Gain=1188-1160=$28 | |||||||||
| Breakeven Price =$1188 | |||||||||
| Potential gain =Infinite | |||||||||
| Potential Loss =Infinite | |||||||||
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