Need help on Question 9. & 10. Thanks
Homework Answers
9. Gross option payoff at expiration= 197-192.50=$4.5 per share
Hence, net payoff/share= 4.5-Option premium=4.5-1.36=$3.14/share or 3.14*100=$314 profit per contract.
10. You have bought 3 options.Hence, you will receive premium of $3 and you paid $50 to buy stock.
Hence, your break even point for the stock is=50-3=$47
However, For the options if it goes beyond=(55+1) or$56 you will incur loss or this is the break even point.
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Need help on Question 9. & 10. Thanks
9) Identify the net profit/loss PER CONTRACT for...
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...
Need help on 20. Thanks 20) in June an investor forms a spread by selling an...
Need help on 20. Thanks
20) in June an investor forms a spread by selling an ABC 50 Call with September expiration for 52.34/Share, and purchasing an ABC 50 call with December expiration for $3.38/share. The investor plans to close out the time spread position in September at the time of the expiration of the September call option. The Black-Scholes value of an ABC 50 call option with six months until expiration is $1.24/share when ABC stock is trading at...
#9. Please help me solve for: "The profit (loss) experienced on option X" for options A-E....
#9. Please help me solve for: "The profit (loss) experienced on
option X" for options A-E. Thanks!
Options profits and losses for each of the 100-share options shown in the following table, use the underlying stock price at expiration and other information to determine the amount of profit or loss an investor would have had, ignoring brokerage fees Option Underlying stock price per share at expiration $51 Type of option Call Call Put Put Call Cost of option $190 $335...
Need help thanks 8 trading / facta in October, an investor purchases an ABC 50 call...
Need help thanks
8 trading / facta in October, an investor purchases an ABC 50 call with December expiration for $2.00/share. In Novem (spot-rok) the share price of ABC stock increases. In November, ABC 50 calls are trading for $6.00, ABC 60 calls are trading for $1.00, and ABC 60 puts are trading for $3.00. Identify the follow-up strategy that could be taken in November that would provide constant profits if the stock price was between $50 and $60 at...
It PusUNUI Cakcyl pom . 9) Consider the following example: SP = $75, UA = $95,...
It PusUNUI Cakcyl pom . 9) Consider the following example: SP = $75, UA = $95, and c 0 = $18. In this case, what is the long call's P&L? 10) Consider a call option with a strike price of $50 and premium of $6. At what underlying asset price does the long call position breakeven? 11) Consider a portfolio consisting of five long forwards with forward price of $40 and twelve long! calls with strike price of $22 and...
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]...
QUESTION 1 Today you are writing a put option on TSLA stock, which is currently valued at $200 per share. The put optio...
QUESTION 1 Today you are writing a put option on TSLA stock, which is currently valued at $200 per share. The put option has a strike price of $178, 6 months to expiration, and currently trades at a premium of $6.1 per share. If at maturity the stock is trading at $164, what is your net profit on this position? Keep in mind that one option Covers 100 shares. QUESTION 2 Today you go long on 5 December contracts of...
Need help on number 19 Thanks. d) Theta -e) Vega 18) Consider the following information regarding a DEF Call option....
Need help on number 19 Thanks.
d) Theta -e) Vega 18) Consider the following information regarding a DEF Call option. Strike price: $115; Current stock price: $112; Continuously compounded riskfree rate: 0 %; Time to expiration: 3 months; Standard deviation of DEF stock: 0.3074; N(D1): 0.4621; N(D2): 0.4017; ABC Beta 1.35; Ln 112/115 -0.0264; Ln 115/112 0.0624; Ln 115/115 0; e^ RT=1.0. Assume you calculate -0.0951 as the value of Di. What is the value of D, for the Black-Scholes...
Lauren purchases 100 shares of Greshak Corp. stock for $63.00 per share and wishes to hedge...
Lauren purchases 100 shares of Greshak Corp. stock for $63.00 per share and wishes to hedge her position by writing a 100 share call option on her holdings. The option has a $65.00 strike price and a premium of $8.75. If Greshak's stock is selling for $64.00 at the time of option's expiration, what will be the overall dollar ($) gain or loss on this covered option strategy? (Consider the underlying stock holding as well the options.) YOU MUST SHOW...
1) A call option is priced at $7 with an exercise price of $100 and an...
1) A call option is priced at $7 with an exercise price of $100 and an underlying stock price of $98. If the stock price at expiry is $102 determine the following: o Option value for a long position o Profit for a long position 2) A put option is priced at $4 with an exercise price of $60 and an underlying price of $62. Determine the following: o Option value for a long position if the stock price at...
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...
Need help on 20. Thanks
20) in June an investor forms a spread by selling an ABC 50 Call with September expiration for 52.34/Share, and purchasing an ABC 50 call with December expiration for $3.38/share. The investor plans to close out the time spread position in September at the time of the expiration of the September call option. The Black-Scholes value of an ABC 50 call option with six months until expiration is $1.24/share when ABC stock is trading at...
#9. Please help me solve for: "The profit (loss) experienced on
option X" for options A-E. Thanks!
Options profits and losses for each of the 100-share options shown in the following table, use the underlying stock price at expiration and other information to determine the amount of profit or loss an investor would have had, ignoring brokerage fees Option Underlying stock price per share at expiration $51 Type of option Call Call Put Put Call Cost of option $190 $335...
Need help thanks
8 trading / facta in October, an investor purchases an ABC 50 call with December expiration for $2.00/share. In Novem (spot-rok) the share price of ABC stock increases. In November, ABC 50 calls are trading for $6.00, ABC 60 calls are trading for $1.00, and ABC 60 puts are trading for $3.00. Identify the follow-up strategy that could be taken in November that would provide constant profits if the stock price was between $50 and $60 at...
It PusUNUI Cakcyl pom . 9) Consider the following example: SP = $75, UA = $95, and c 0 = $18. In this case, what is the long call's P&L? 10) Consider a call option with a strike price of $50 and premium of $6. At what underlying asset price does the long call position breakeven? 11) Consider a portfolio consisting of five long forwards with forward price of $40 and twelve long! calls with strike price of $22 and...
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]...
QUESTION 1 Today you are writing a put option on TSLA stock, which is currently valued at $200 per share. The put option has a strike price of $178, 6 months to expiration, and currently trades at a premium of $6.1 per share. If at maturity the stock is trading at $164, what is your net profit on this position? Keep in mind that one option Covers 100 shares. QUESTION 2 Today you go long on 5 December contracts of...
Need help on number 19 Thanks.
d) Theta -e) Vega 18) Consider the following information regarding a DEF Call option. Strike price: $115; Current stock price: $112; Continuously compounded riskfree rate: 0 %; Time to expiration: 3 months; Standard deviation of DEF stock: 0.3074; N(D1): 0.4621; N(D2): 0.4017; ABC Beta 1.35; Ln 112/115 -0.0264; Ln 115/112 0.0624; Ln 115/115 0; e^ RT=1.0. Assume you calculate -0.0951 as the value of Di. What is the value of D, for the Black-Scholes...
1) A call option is priced at $7 with an exercise price of $100 and an underlying stock price of $98. If the stock price at expiry is $102 determine the following: o Option value for a long position o Profit for a long position 2) A put option is priced at $4 with an exercise price of $60 and an underlying price of $62. Determine the following: o Option value for a long position if the stock price at...
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