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C. A one-month expiration call D. A one-month expiration call on the same stock with an...
Consider three call options on the same underlying stock and same expiration date. You buy the...
Consider three call options on the same underlying stock and same expiration date. You buy the call with X=40, buy the call with X=30, and sell two calls with X=35. What is the payoff from your position if the stock prices ends at $32? What is the highest payoff from this position? What is the lowest payoff from this position? For you to engage in such a position, what are your expectations about the stock price? PS: In all questions...
1. A six-month call is the right to buy stock at $20. Currently, the stock is...
1. A six-month call is the right to buy stock at $20. Currently, the stock is selling for $22, and the call is selling for $5. You buy 100 shares ($2,200) and sell one call (in other words, you receive $500). a. Does this position illustrate covered or naked call writing? b. If, at the expiration date of the call, the price of the stock is S29, what is your profit on the combined position? c. If, at the expiration...
Netflix is selling for $105 a share. A Netflix call option with one month until expiration...
Netflix is selling for $105 a share. A Netflix call option with one month until expiration and an exercise price of $121 sells for $2.30 while a put with the same strike and expiration sells for $17.40. a. What is the market price of a zero-coupon bond with face value $121 and 1-month maturity? (Round your answer to 2 decimal places.) Market price b. What is the risk-free interest rate expressed as an effective annual yield? (Round your answer to...
Netflix is selling for $100 a share. A Netflix call option with one month until expiration...
Netflix is selling for $100 a share. A Netflix call option with one month until expiration and an exercise price of $109 sells for $2.40 while a put with the same strike and expiration sells for $11.25. a. What is the market price of a zero-coupon bond with face value $109 and 1-month maturity? (Round your answer to 2 decimal places.) Market price b. What is the risk-free interest rate expressed as an effective annual yield? (Round your answer to...
4- Consider two call options on the same underlying stock and same expiration date. You buy...
4- Consider two call options on the same underlying stock and same expiration date. You buy the call with X=40, and sell the call with X=50. What is the payoff from your position if the stock prices ends at $32? What is the highest payoff from this position? What is the lowest payoff from this position? When would you engage in such a position? PS: In all questions above X denotes the exercise price of the options, C=call premium, P=put...
Netflix is selling for $105 a share. A Netflix call option with one month until expiration...
Netflix is selling for $105 a share. A Netflix call option with one month until expiration and an exercise price of $121 sells for $2.30 while a put with the same strike and expiration sells for $17.40. a. What is the market price of a zero-coupon bond with face value $121 and 1-month maturity? (Round your answer to 2 decimal places.) Market price b. What is the risk-free interest rate expressed as an effective annual yield? (Round your answer to...
Consider the following option portfolio: You write a January 2012 expiration call option on IBM with...
Consider the following option portfolio: You write a January 2012 expiration call option on IBM with exercise price $172, and the price of the call option is $8.93. You also write a January expiration IBM put option with exercise price $167, the price of the put option is $10.85. Instructions: for parts a, b, and c, enter your answer as a decimal rounded to the nearest cent. a. What will be the profit/loss on this position if IBM is selling...
Consider the following option portfolio: You write a January 2012 expiration call option on IBM with...
Consider the following option portfolio: You write a January 2012 expiration call option on IBM with exercise price $170, and the price of the call option is $8.93. You also write a January expiration IBM put option with exercise price $165, the price of the put option is $10.85. Instructions: for parts a, b, and c, enter your answer as a decimal rounded to the nearest cent. a. What will be the profit/loss on this position if IBM is selling...
Suppose you purchase one Texas Instruments August 75 call contract quoted at $8.50. If, at expiration,...
Suppose you purchase one Texas Instruments August 75 call contract quoted at $8.50. If, at expiration, the price of a share of Texas Instruments stock is $79, your profit would be _________. (Note: One contract consists of 100 options.) A) 400 B) -400 C) 450 D) -450 Suppose you write one Texas Instruments August 80 call contract quoted at $6. If, at expiration, the price of a share of Texas Instruments stock is $79, your profit would be _________. A)...
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]...
Consider three call options on the same underlying stock and same expiration date. You buy the call with X=40, buy the call with X=30, and sell two calls with X=35. What is the payoff from your position if the stock prices ends at $32? What is the highest payoff from this position? What is the lowest payoff from this position? For you to engage in such a position, what are your expectations about the stock price? PS: In all questions...
1. A six-month call is the right to buy stock at $20. Currently, the stock is selling for $22, and the call is selling for $5. You buy 100 shares ($2,200) and sell one call (in other words, you receive $500). a. Does this position illustrate covered or naked call writing? b. If, at the expiration date of the call, the price of the stock is S29, what is your profit on the combined position? c. If, at the expiration...
Netflix is selling for $105 a share. A Netflix call option with one month until expiration and an exercise price of $121 sells for $2.30 while a put with the same strike and expiration sells for $17.40. a. What is the market price of a zero-coupon bond with face value $121 and 1-month maturity? (Round your answer to 2 decimal places.) Market price b. What is the risk-free interest rate expressed as an effective annual yield? (Round your answer to...
Netflix is selling for $100 a share. A Netflix call option with one month until expiration and an exercise price of $109 sells for $2.40 while a put with the same strike and expiration sells for $11.25. a. What is the market price of a zero-coupon bond with face value $109 and 1-month maturity? (Round your answer to 2 decimal places.) Market price b. What is the risk-free interest rate expressed as an effective annual yield? (Round your answer to...
4- Consider two call options on the same underlying stock and same expiration date. You buy the call with X=40, and sell the call with X=50. What is the payoff from your position if the stock prices ends at $32? What is the highest payoff from this position? What is the lowest payoff from this position? When would you engage in such a position? PS: In all questions above X denotes the exercise price of the options, C=call premium, P=put...
Netflix is selling for $105 a share. A Netflix call option with one month until expiration and an exercise price of $121 sells for $2.30 while a put with the same strike and expiration sells for $17.40. a. What is the market price of a zero-coupon bond with face value $121 and 1-month maturity? (Round your answer to 2 decimal places.) Market price b. What is the risk-free interest rate expressed as an effective annual yield? (Round your answer to...
Consider the following option portfolio: You write a January 2012 expiration call option on IBM with exercise price $170, and the price of the call option is $8.93. You also write a January expiration IBM put option with exercise price $165, the price of the put option is $10.85. Instructions: for parts a, b, and c, enter your answer as a decimal rounded to the nearest cent. a. What will be the profit/loss on this position if IBM is selling...
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]...
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