Homework Answers
Ans :
(i) Payoff is zero , since the price is less than strike price, it is not exercised.
(ii) 310 , 310-290 = $ 20 is the payoff
(iii) 400 , 400 - 290 = $ 110 is the payoff.
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3. (3x3-9 pts) If you are short I share of a call option on TSLA at...
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a) You have written a call option on 1 share of A Street stock that is worth $15. You expect the price of the stock to either move to $20 or $10 over the next year. How many shares of A Street stock should you own to perfectly hedge your position on the call option? The strike price on the option is $15. b) If the one-year risk-free interest rate is 10% and the strike price on the option is...
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Today you are writing a put option on TSLA stock, which is currently valued at $200...
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QUESTION 1 Today you are writing a put option on TSLA stock, which is currently valued...
QUESTION 1 Today you are writing a put option on TSLA stock, which is currently valued at $200 per share. The put option has a strike price of $187, 6 months to expiration, and currently trades at a premium of $4.8 per share. If at maturity the stock is trading at $150, what is your net profit on this position? Keep in mind that one option covers 100 shares.
Below is a list of call and put option premiums with different strike prices. The options...
Below is a list of call and put option premiums with different
strike prices. The options mature 1 year later.
The current stock price is 900. The risk-free interest rate is
6% p.a., continuously compounded.
(i) Find out the cost of the following payoff diagram:
(ii) Find out the cost of the following payoff diagram:
(iii) Find out the cost of the following payoff diagram:
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Below is a list of call option premiums with different strike prices. The options mature 1...
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p.a., continuously compounded.
(i) Find out the cost of the following payoff diagram:
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(iii) Find out the cost of the following payoff diagram:
(iv) Find out the cost of the following payoff diagram:
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QUESTION 1 Today you are writing a put option on TSLA stock, which is currently valued at $200 per share. The put option has a strike price of $187, 6 months to expiration, and currently trades at a premium of $4.8 per share. If at maturity the stock is trading at $150, what is your net profit on this position? Keep in mind that one option covers 100 shares.
Below is a list of call and put option premiums with different
strike prices. The options mature 1 year later.
The current stock price is 900. The risk-free interest rate is
6% p.a., continuously compounded.
(i) Find out the cost of the following payoff diagram:
(ii) Find out the cost of the following payoff diagram:
(iii) Find out the cost of the following payoff diagram:
(iv) Find out the cost of the following payoff diagram:
(v) What is the price...
Below is a list of call option premiums with different strike
prices. The options mature 1 year later.
The current stock price is 50. The risk-free interest rate is 5%
p.a., continuously compounded.
(i) Find out the cost of the following payoff diagram:
(ii) What is the price such that the above strategy is
break-even?
(iii) Find out the cost of the following payoff diagram:
(iv) Find out the cost of the following payoff diagram:
(v) Find out the cost...
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