ZuoTi.Pro
Question

Use the information in this table for Q16. Stock Price Call Premium Put Premium Strike Price W3250 V385 V105 V3000 Q16. An in
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

The Total profit in all these stock prices can be calculated as below:

Stock Sell Prices ( S) Stock Buy price (P) Short call @ 3000 strike price (L) Short call premium received (C) Gain/(loss) from stock (G) =S-P Total Profit = L+C+G
2400 3250 0 385 -850 -465
2700 3250 0 385 -550 -165
3000 3250 0 385 -250 135
3300 3250 -300 385 50 135
3600 3250 -600 385 350 135
0 0
Add a comment
Know the answer?
Add Answer to:
Use the information in this table for Q16. Stock Price Call Premium Put Premium Strike Price...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • The current stock price is 100. The call option premium with a strike price 100 is...

    The current stock price is 100. The call option premium with a strike price 100 is 8. The effective risk-free interest rate is 2%. The stock pays no dividend. What is the price of a put option with strike price 100? (Both options mature in 3 months.)

  • (i) The current stock price is 100. The call option premium with a strike price 100...

    (i) The current stock price is 100. The call option premium with a strike price 100 is 8. The effective risk-free interest rate is 2%. The stock pays no dividend. What is the price of a put option with strike price 100? (Both options mature in 3 months.) (ii) The 3-month forward price is 50. The put option premium with a strike price 52 is 3 and the put option matures in 3 months. The risk-free interest rate is 4%...

  • suppose a call option with a strike price of $60 has a premium of $15, while...

    suppose a call option with a strike price of $60 has a premium of $15, while another call on the same underlying stock has a strike price of $65 and a premium of $14. Both options expire at the same time. in this situation, an arbitrager would... a. buy the 65-strike call and sell the 60-strike short b. sell both call options. c. do nothing because arbitrage isn’t possible d. buy the 60 strike call and sell the 65-strike call...

  • A call option has a premium of $0.60, a strike price of $40, and 3 months...

    A call option has a premium of $0.60, a strike price of $40, and 3 months to expiration. The current stock price is $39.60. The stock will pay a $0.80 dividend two months from now. The risk-free rate is 3 percent. What is the premium on a 3-month put with a strike price of $40? Assume the options are European style.

  • 14. A call option has a premium of $0.60, a strike price of $40, and 3...

    14. A call option has a premium of $0.60, a strike price of $40, and 3 months to expiration. The current stock price is $39.60. The stock will pay a $0.80 dividend two months from now. The risk-free rate is 3 percent. What is the premium on a 3-month put with a strike price of $40? Assume the options are European style. Page 4

  • The current price of a stock is $31.50 per share, and six-month European call options on...

    The current price of a stock is $31.50 per share, and six-month European call options on the stock with a strike price of $32.50 are currently trading at $3.60. An investor, who has $10,000 of capital to invest, believes that the price of the stock will increase by 20% over the next six months. The investor is trying to decide between two strategies - buying shares or buying call options. What return will each strategy produce after six months, if...

  • Open Buying a Call Stock Option Open Buying a Put Stock Option Number Strike Stock Call...

    Open Buying a Call Stock Option Open Buying a Put Stock Option Number Strike Stock Call Number Strike Stock Put of Contracts Price Price Premium of Contracts Price Price Premium 1 36 35 1.25 1 36 35 1.45 Intrinsic Value Intrinsic Value Time Value Time Value Cost Cost Close Close Number Strike Stock Call Number Strike Stock Put of Contracts Price Price Premium of Contracts Price Price Premium 1 36 40 4.25 1 36 40 0.05 Intrinsic Value Intrinsic Value...

  • With a covered call strategy, an advantage of selecting a low strike price for the call...

    With a covered call strategy, an advantage of selecting a low strike price for the call option is: A. it’s more likely to expire out-the-money than a call with a higher strike price B. it costs less to buy than a call option with a higher strike price C. the cash inflow from the premium is higher than for a call option with a higher strike price D. the maximum profit is greater than for a call option with a...

  • A European call option and put option on a stock both have a strike price of...

    A European call option and put option on a stock both have a strike price of $45 and an expiration date in six months. Both sell for $2. The risk-free interest rate is 5% p.a. The current stock price is $43. There is no dividend expected for the next six months. a) If the stock price in three months is $48, which option is in the money and which one is out of the money? b) As an arbitrageur, can...

  • Consider a call and a put option, both with strike price of $30 and 3 months to expiration. The call trades at $4, the put price is $5, the interest rate is 0, and the price of the underlying stock is...

    Consider a call and a put option, both with strike price of $30 and 3 months to expiration. The call trades at $4, the put price is $5, the interest rate is 0, and the price of the underlying stock is $29. a.Suppose the stock does not pay dividends. Is there an arbitrage? If so, write down the sequence of trades and calculate the arbitrage profit you realize in 3 months. If not, explain why not. b.Suppose the stock will...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT