Homework Answers
e. TRUE. A straddle involves both calls and puts of the same expiration and strike. If the strikes are different but the expiration is the same then it is called a strangle.
f. FALSE. Short a Put is "bullish". Short put profits when the underlying stock moves up.
g. FALSE. The "butterfly" involves only calls or put, but not both.
h. TRUE. An out of the money option has no "intrinsic value", but only time value.
i. TRUE. The greater the price of the stock the greater should be the price of a call option.
j. TRUE. The lesser the price of the stock the lesser should be the price of a put option.
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o - bs. A straddle involves both calls and puts of the same...
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).
A put option and a call option on a stock have the same expiration date and the same exercise (or strike price). Both options expire in 6 months. Assume that put-call parity holds and interest rate is...
A put option and a call option on a stock have the same expiration date and the same exercise (or strike price). Both options expire in 6 months. Assume that put-call parity holds and interest rate is positive. If both call and put options have the same price, which of the following is true? A) Put option is in-the-money. B) Call option is in-the-money. C) Both call and put options are in-the-money. D) Both call and put options are out-of-the-money.
5. A call option on Company B common stock is worth $8 with 7 months before...
5. A call option on Company B common stock is worth $8 with 7 months before expiration. The strike price on the call is $40 and the price per share is currently trading at $44 per share. The put option at the same exercise price is worth $1.50. a. Is the call option in or out or the money? b. Is the put option in or out of the money? c. At what extra above expiration value is the call...
NEED HELP You create a straddle with a call and put option with the same strike...
NEED HELP
You create a straddle with a call and put option with the same strike price of $50. The price of the call option is $4 and the price of the put option is $3. If the stock price is $18 at the maturity of the options, what is the net payoff from the straddle? A. $17 ம ப ்
G) Consider buying a call and a put option, both with a strike price of $20...
G) Consider buying a call and a put option, both with a strike price of $20 and the same expiration. Fill in the table for the payoffs of the straddle
Suppose the DJIA stands at 11,500. You want to set up a long straddle by purchasing...
Suppose the DJIA stands at 11,500. You want to set up a long straddle by purchasing 100 calls and an equal number of puts on the index, both of which expire in three months and have a strike of 115. The put price is listed at $1.50 and the call sells for $2.50. a. What will it cost you to set up the straddle, and how much profit (or loss) do you stand to make if the market falls by...
(1pt) One futures contract is traded where both the long and short parties are closing out...
(1pt) One futures contract is traded where both the long and short parties are closing out existing positions. What is the resultant change in the open interest? No change Decrease by one Decrease by two Increase by one (1pt) When the strike price increases with all else remaining the same, which of the following is true? Both calls and puts increase in value Both calls and puts decrease in value Calls increase in value while puts decrease in value Puts...
A call option on a stock with a strike price of $60 costs $8. A put...
A call option on a stock with a strike price of $60 costs $8. A put option on the same stock with the same strike price costs $6. They both expire in 1 year. (a) How can these two options be used to create a straddle? (b) What is the initial investment? (c) Construct a table showing how the payoff and profit varies with ST in 1 year, for the straddle that you constructed. Whenever you need to refer to...
I screenshot everything and put them in order, please complete every little boxes. the others are...
I screenshot everything and put them in order, please complete
every little boxes. the others are the info provided for it.
Problems: Nondirection Dependent Strategies -- Straddles and Strangles Straddles and Strangles can be profitable regardless of which way the underlying moves -- profitability is not dependent on the direction of the underlying. Depending on whether you are long or short the position, profitability may not depend upon a move at all. This does not by any means make them...
04: Which one of the following situations will produce the me Assume the options are all...
04: Which one of the following situations will produce the me Assume the options are all in-the-money. Wations will produce the highest put price, all else constant? A. $15 strike price; 45 days to option expiration B. $15 strike price: 60 days to option expiration C. $20 strike price; 45 days to option expiration D. $20 strike price; 60 days to option expiration E. Insufficient information is provided to answer this question Q5: You know that a call will finish...
NEED HELP
You create a straddle with a call and put option with the same strike price of $50. The price of the call option is $4 and the price of the put option is $3. If the stock price is $18 at the maturity of the options, what is the net payoff from the straddle? A. $17 ம ப ்
Suppose the DJIA stands at 11,500. You want to set up a long straddle by purchasing 100 calls and an equal number of puts on the index, both of which expire in three months and have a strike of 115. The put price is listed at $1.50 and the call sells for $2.50. a. What will it cost you to set up the straddle, and how much profit (or loss) do you stand to make if the market falls by...
I screenshot everything and put them in order, please complete
every little boxes. the others are the info provided for it.
Problems: Nondirection Dependent Strategies -- Straddles and Strangles Straddles and Strangles can be profitable regardless of which way the underlying moves -- profitability is not dependent on the direction of the underlying. Depending on whether you are long or short the position, profitability may not depend upon a move at all. This does not by any means make them...
04: Which one of the following situations will produce the me Assume the options are all in-the-money. Wations will produce the highest put price, all else constant? A. $15 strike price; 45 days to option expiration B. $15 strike price: 60 days to option expiration C. $20 strike price; 45 days to option expiration D. $20 strike price; 60 days to option expiration E. Insufficient information is provided to answer this question Q5: You know that a call will finish...
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