You just bought four contracts of call options and sold six contracts of put options, both with exercise price of $2.55. The premium for the call and put is $.24 and $1.08, respectively. Both expire in six months. What would your combined profit/loss be if the stock price at expiration is $1.94?
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You just bought four contracts of call options and sold six contracts of put options, both...
Stephen just bought 1 contract of put options and, at the same time, 2 contracts of call options on the Swiss francs (SF) at the strike price of 60 cents per franc. Each option contract is for SF 12,000. The option will expire in three months. The put premium is 2.50 cents per SF and the call premium is 2.00 cents per SF. (1) Diagram the ‘combined’ dollar profit schedule against the future spot exchange rate. (2) Compute and show...
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.
You have bought a European put and sold a European call on a company's stock, with both options having the same exercise price of $30. This combined position is equivalent to: Question 3 options: A) A short position at a forward price of $30. B) A long position at a forward price of $30. C) Neither of the above.
1 Problem 2 (25 points) 2 You just bought 200 shares of Ford stock for $5 a share. You do not anticipate the stock price of Ford to change over 3 the course of next year. You have acquired shares because Ford pays large dividends. Given this view you decide 4 to enter an option position to further increase your income. Assume that the excercise price is $5 a share for both 5 put and call; call price is $0.85...
8. The five factors affecting prices of call and put options Both call and put options are affected by the following five factors: the exercise price, the underlying stock price, the time to expiration, the stock’s standard deviation, and the risk-free rate. However, the direction of the effects on call and put options could be different. Use the following table to identify whether each statement describes put options or call options: Statement Put Option Call Option 1. An increase in...
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...
financial PROBLEM 2. 14 pointsl European call and put options with exercise price $22.5 and expiration time in six months are trading at $4.12 and $7.42. The price of the underlying stock is $19.32 and the interest rate is 4.15%. Find an arbitrage opportunity, describe the arbitrage strategy, calculate the arbitrage profit. Provide the details. PROBLEM 2. 14 pointsl European call and put options with exercise price $22.5 and expiration time in six months are trading at $4.12 and $7.42....
2. (15 points) Suppose that you traded the following options on Facebook’s stock: a. Sold 1 call option with an exercise price of $250 at the price of $40; b. Sold 1 put option with an exercise price of $250 at the price of $30; and c. Bought 1 call option with an exercise price of $300 at the price of $22. Also, suppose that: i. All options are European; ii. The options expire one year from now; and iii. As...
32 33 please!!! ou sell (write) four call option contracts with a strike price of $27.50 and an option remium of $0.66. At expiration, the stock was selling for $26.90 a share. What is the total profit or loss on your option position? 2) You purchased three put option contracts with a strike price of $30 and a premium of $o.90 At expiration, the stock was selling for $24.80 a share. What is the total profit or loss on your...
Suppose a stock valued at $30 today and that European call and put options are offered on this asset today, expire at the same time, and that both carry a strike price of $33. If the premium on the call and put are $12 and $9 respectively and the interest rate stays at 6%, how soon should the options to avoid arbitrage?