Homework Answers
Considering a call contract is on 100 shares
Purchasing price of 1 call contract = 100*$5 = $500
Selling price of 1 call contract = 100*$15 = $1500
Gain = $(1500-500) = $1000
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9- Today, I bought I call contract on GM with one-year to maturity with an exercise...
12- Today, I bought 1 call contract on GM with one-year to maturity with an exercise...
12- Today, I bought 1 call contract on GM with one-year to maturity with an exercise price of $50 at a premium of $5 when GM stock price was $50. Two month later, GM stock price closed at $62 while the option premium was $15 at which time I closed my position by selling my call option. Compute my gain/loss. PS: In all questions above X denotes the exercise price of the options, C=call premium, P=put premium, and S=stock price.
11- Today, I bought I put contract on GM with one-year to maturity with an exercise...
11- Today, I bought I put contract on GM with one-year to maturity with an exercise price of $60 at a premium of $7 when GM stock price was $55. Three month later, GM stock price closed at $52 while the option premium was $12 at which time I closed my position by exercising my put option. Compute my gain/loss. PS: In all questions above X denotes the exercise price of the options, C=call premium, P=put premium, and S=stock price.
10- Today, I bought I put contract on GM with one-year to maturity with an exercise...
10- Today, I bought I put contract on GM with one-year to maturity with an exercise price of $60 at a premium of $7 when GM stock price was $55. Three month later, GM stock price closed at $52 while the option premium was $12 at which time I closed my position by selling my put option. Compute my gain/loss. PS: In all questions above X denotes the exercise price of the options, C=call premium, P=put premium, and S=stock price.
14- Today, I bought 1 call contract on GM with one-year to maturity with an exercise...
14- Today, I bought 1 call contract on GM with one-year to maturity with an exercise price of $50 at a premium of $5 when GM stock price was $50. At what stock price will I break-even at the maturity date ignoring transactions costs? PS: In all questions above X denotes the exercise price of the options, C=call premium, P=put premium, and S=stock price.
13- Today, I bought 1 put contract on GM with one-year to maturity with an exercise...
13- Today, I bought 1 put contract on GM with one-year to maturity with an exercise price of $60 at a premium of $7 when GM stock price was $55. At what stock price will I break-even at the maturity date ignoring transactions costs? PS: In all questions above X denotes the exercise price of the options, C=call premium, P=put premium, and S=stock price.
7- On January 11, I purchased a call and a put on Exxon with exercise price...
7- On January 11, I purchased a call and a put on Exxon with exercise price of $50 and March 15, maturity when Exxon was selling for $55 at a total cost of $11. On January 21,Exxon falls to $45 and I decide to close my position by exercising (assuming in the money) both my options. Compute my profit/loss. PS: In all questions above X denotes the exercise price of the options, C=call premium, P=put premium, and S=stock price.
6- On January 11, I purchased a call option on Exxon at a premium of $14.5,...
6- On January 11, I purchased a call option on Exxon at a premium of $14.5, exercise price of $50 and March 15, maturity. On January 21,I decide to close my position by buying a put option on Exxon at a premium of $8.5, exercise price of $50 and March 15, maturity. Is my original position closed? Comment critically. PS: In all questions above X denotes the exercise price of the options, C=call premium, P=put premium, and S=stock price.
Question 7: 1. Both a call option and a put option are currently traded on stock...
Question 7:
1. Both a call option and a put option are currently traded on stock AXT. Both options have a strike price of $90 and maturity (T) of three months. The call premium (Co) is $2.75, the put premium (Po) is $4.12, and the underlying stock price (So) is $89.50. Assume that you trade one contract that has 100 shares when you calculate profit or loss. What will be your profit (or loss) if you take a long position...
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...
A stock price is $25. An investor buys one put option contract on the stock with...
A stock price is $25. An investor buys one put option contract on the stock with a strike price of $24 and sells a put option contract on the stock with a strike price of $22.50. The market prices of the options are $2.12 and$1.95, respectively. The options have the same maturity date. Describe the investor's position and the possible gain/loss he will get (taking into account the initial investment).
12- Today, I bought 1 call contract on GM with one-year to maturity with an exercise price of $50 at a premium of $5 when GM stock price was $50. Two month later, GM stock price closed at $62 while the option premium was $15 at which time I closed my position by selling my call option. Compute my gain/loss. PS: In all questions above X denotes the exercise price of the options, C=call premium, P=put premium, and S=stock price.
11- Today, I bought I put contract on GM with one-year to maturity with an exercise price of $60 at a premium of $7 when GM stock price was $55. Three month later, GM stock price closed at $52 while the option premium was $12 at which time I closed my position by exercising my put option. Compute my gain/loss. PS: In all questions above X denotes the exercise price of the options, C=call premium, P=put premium, and S=stock price.
10- Today, I bought I put contract on GM with one-year to maturity with an exercise price of $60 at a premium of $7 when GM stock price was $55. Three month later, GM stock price closed at $52 while the option premium was $12 at which time I closed my position by selling my put option. Compute my gain/loss. PS: In all questions above X denotes the exercise price of the options, C=call premium, P=put premium, and S=stock price.
14- Today, I bought 1 call contract on GM with one-year to maturity with an exercise price of $50 at a premium of $5 when GM stock price was $50. At what stock price will I break-even at the maturity date ignoring transactions costs? PS: In all questions above X denotes the exercise price of the options, C=call premium, P=put premium, and S=stock price.
13- Today, I bought 1 put contract on GM with one-year to maturity with an exercise price of $60 at a premium of $7 when GM stock price was $55. At what stock price will I break-even at the maturity date ignoring transactions costs? PS: In all questions above X denotes the exercise price of the options, C=call premium, P=put premium, and S=stock price.
7- On January 11, I purchased a call and a put on Exxon with exercise price of $50 and March 15, maturity when Exxon was selling for $55 at a total cost of $11. On January 21,Exxon falls to $45 and I decide to close my position by exercising (assuming in the money) both my options. Compute my profit/loss. PS: In all questions above X denotes the exercise price of the options, C=call premium, P=put premium, and S=stock price.
6- On January 11, I purchased a call option on Exxon at a premium of $14.5, exercise price of $50 and March 15, maturity. On January 21,I decide to close my position by buying a put option on Exxon at a premium of $8.5, exercise price of $50 and March 15, maturity. Is my original position closed? Comment critically. PS: In all questions above X denotes the exercise price of the options, C=call premium, P=put premium, and S=stock price.
Question 7:
1. Both a call option and a put option are currently traded on stock AXT. Both options have a strike price of $90 and maturity (T) of three months. The call premium (Co) is $2.75, the put premium (Po) is $4.12, and the underlying stock price (So) is $89.50. Assume that you trade one contract that has 100 shares when you calculate profit or loss. What will be your profit (or loss) if you take a long position...
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...
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