Question

Assume you buy a call option for £31,250 with a strike price of $1.330/f and a premium of $.0OSVE Assume you buy a put option for £31,250 with a strike price of S1.310/s and a premium of s.ovE. 1. Turn in a spreadsheet (Use Excel) (50 points) Examine the payoffs from possible ending spot rates of $1.270/E to $1.370/E with increments of $.005. (i.e, 1.270, 1.275, 1.280,.... ..365, 1.370) Build a spreadsheet exactly as we did in class to show the payments, receipts and net position for each option and spot rate. For example 31 25o: 1 Spot rates 1.270 1.275 1.280 1.285 .. Premium Option Exercise? Call Receipts Spot sale of£? ? ? Call Net Position? ? 2. Tum in a graph (Use Excel) and another spreadsheet (34 points) I want hard copies, not electronic. Graph the put option, call option and the net payoff from the combined strategy with the spot rates on the x- axis, and the payoff amount on the y-axis. (I want all three lines on 1 graph, not 3 separate graphs) make the graph the WHOLE Hint: for graphing purposes set up a spreadsheet asfollows, shade it with the mouse. and click on the graph wizard Spot rates 1.270 1.275 Call Profit CS CS Put Profit PS PS Net Position CS+PS CS+PS

Answer 1

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日勺▼ ▼ Book1 - Excel Santa Mehta File Home Insert Page Layout Formulas Data Review View Developer Help Tell me what you want to do 5Call Payments 7 Option Exercise NO Strikr Price ะเ 1.330/ GBP 6 Premium .005 0.005 0.005 0.005 0.005 0.005 0.005 0.005 0.005 0.005 0.005 0.005 NO 0.005 YES 0.005 YES 0 005 YES 0 005 YES 0.005 YES 0.005 YES 0.005 YES YES YES 8 fSpot price> Strike price, then exercise 11 Call Receipts 12 Spot Sale of GBP 1.270 1275 1.280 1285 1290 1295 1300 1305 1310 1315 1320 1325 330 1335 1340 1345 1350 1355 360 1365 1370 14 Call 15 Net Position 16 Spot Sale Premium $1330 -oo65 -oo60 -oo55 -oo5o -oo45 -o040 -oo35 -o030 -oo25 -oo2o -oo15 -oo2o -oo05 o.ooo ooo5。оо。015 o.020 0025。030 oo35 Total Payofffor GBP 31250 -2031 25-1875-1718 75.2562.5-1406 25-1250-109375 ·9375-781. 25-625-468 75-3125-56 25 o 5625 3125 468.75625 781 25 9375 1093 75 21 Put Payments 22 Premium 23 Option Exercise YES 24 IfSpot price < Strike price, then exercise 0.01 0.01 YES 0.01 YES 0.01 YES 0.01 YES 0.01 YES 0.01 0.01 0.01 0.01 0.01 YES YES YES NO NO NO NO NO 25 Strikr Price $1.31o GBP 27 Put Receipts 28 Spot Buy or GBP 1.270 1275 1.280 1285 1290 1295 1300 1305 1310 1315 1320 1325 330 1335 1340 1345 1350 1355 360 1365 1370 30 Put Net Position 32 $1310-Spot Buy Premium o030 0025。020 ο.015 oono o 005 oooo -oo05 -ooao -oo15 -o020 -o025 -oo30 -o035 -o040 -oo45 -oo50 -o055 -oo60 -oo65 -oo70 Total Payofffor 9375 25 625 468 75 312.5 156.25 2.11E-11.156 25-312 5 .468 75-625-781 25-937 5.1093 75-1250-1406 25-1562 5-2718 75 -aB75-2031 25.2187 5 GBP 3125 Sheet2 Sheet Ready 1,--+ 90%