Homework Answers
Unlimited upside potential exists for call option holders.
They pay premium which restricts maximum loss to premium paid.
Break even is when stock price reaches strike price plus premium paid.
Increase in price of stock increases upside profit.
Profit diagram considers option premium into consideration.
Answer is:
profit diagram for the buyer of call option.
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Figure 1 depicts the: Profit $80 Share price $9 -Breakeven is $89 Loss Figure-1 position diagram...
• Profit/loss for buyers/sellers of call option/put option Breakeven for call option/put option An investor bought...
• Profit/loss for buyers/sellers of call option/put option Breakeven for call option/put option An investor bought 1 XYZ March 30 call for 3. o What is the breakeven point? 3043-33 o What is the initial investment of this strategy? 300 o What is the profit/loss if XYZ trades for 25 at expiration? o What is the profit/loss if XYZ trades for 35 at expiration? o What is the max. profit? P *LP o What is the max. loss? Premium
Now let's say you believe EFG stock will increase in price of $50 share. so you...
Now let's say you believe EFG stock will increase in price of $50 share. so you decide to purchase a lune Call option for 100 shares for a 30 day time limit. Assume that I call option contract equals to 100 shares and the call premium per share is $2/share. (6 points total) a) Are you the long call or short call option? are you the buyer or seller? b) How much will you spend for the entire call option...
Need help on Question 9. & 10. Thanks 9) Identify the net profit/loss PER CONTRACT for...
Need help on Question 9. & 10. Thanks
9) Identify the net profit/loss PER CONTRACT for the given option position. Each contract covers 100 shares. Clearly indicate any loss with a negative value. Assume the position is held until expiration. A long SPY 192.50 call (premium $1.36/share). SPY is trading at $197/share at expiration. 10) Identify every breakeven point for the overall option strategy. A ratio call write (stock purchased at $50, 3 short calls with strike = 55 and...
You are short a $36 call on 100 shares of Exxon Mobile. The breakeven share price...
You are short a $36 call on 100 shares of Exxon Mobile. The breakeven share price on this option contract is $38.92/share. When the option expires, Exxon Mobile is trading at $30/share. At expiration, what is the profit (+) or loss (-) for this option contract? (rounded $ to two places after the decimal)
1. Consider a call option selling for $ 4 in which the exercise price is $50....
1. Consider a call option selling for $ 4 in which the exercise price is $50. A) Determine the value at expiration and the profit for a buyer under the following outcomes: i. The price of the underlying at expiration is $55 ii. The price of the underlying at expiration is $51 iii. The price of the underlying at expiration is $48 B) Determine the value at expiration and the profit for a seller under the following outcomes: i. The...
Suppose you are given the following information: Current Price of the GPRO stock: Strike Price of...
Suppose you are given the following information: Current Price of the GPRO stock: Strike Price of a 1 year call option: Market Price (premium) of the call option: Strike Price of a 1 year put option: Market Price (premium) of the put option: $4.30 $7.00 $0.49 $7.00 $3.08 (a) What is the maximum amount the buyer of the call option can gain (per share)? [2 Points] (b) What is the maximum amount the seller of the call option can lose...
#9. Please help me solve for: "The profit (loss) experienced on option X" for options A-E....
#9. Please help me solve for: "The profit (loss) experienced on
option X" for options A-E. Thanks!
Options profits and losses for each of the 100-share options shown in the following table, use the underlying stock price at expiration and other information to determine the amount of profit or loss an investor would have had, ignoring brokerage fees Option Underlying stock price per share at expiration $51 Type of option Call Call Put Put Call Cost of option $190 $335...
A 1-year European put option on a stock with strike price of $50 is quoted as...
A 1-year European put option on a stock with strike price of $50 is quoted as $7; a 1-year European call option on the same stock with strike price $30 is quoted as $5. Suppose you long one put and short one call (one option is on 100 share). a) Draw the payoff diagram for your put position and call position. (5 points) b) After 1-year, stock price turns out to be $45. What is your total payoff? What is...
Use the date in Figure 15.1to calculate both the payoff and the profit or loss per...
Use the date in Figure 15.1to calculate both the payoff and the
profit or loss per share for the investments in each of the
following July 2017 expiration options, if the stock price on the
expiration date is $72. (Loss amounts should be indicated
by a minus sign. Round Profit/Loss to 2 decimal
places.)
Payoff
Profit/Loss
a.
Call option, X = 70
2.00selected answer correct
(0.02)selected answer incorrect
b.
Put option, X = 70
0.00selected answer correct
(0.24)selected answer incorrect...
1) A call option is priced at $7 with an exercise price of $100 and an...
1) A call option is priced at $7 with an exercise price of $100 and an underlying stock price of $98. If the stock price at expiry is $102 determine the following: o Option value for a long position o Profit for a long position 2) A put option is priced at $4 with an exercise price of $60 and an underlying price of $62. Determine the following: o Option value for a long position if the stock price at...
• Profit/loss for buyers/sellers of call option/put option Breakeven for call option/put option An investor bought 1 XYZ March 30 call for 3. o What is the breakeven point? 3043-33 o What is the initial investment of this strategy? 300 o What is the profit/loss if XYZ trades for 25 at expiration? o What is the profit/loss if XYZ trades for 35 at expiration? o What is the max. profit? P *LP o What is the max. loss? Premium
Now let's say you believe EFG stock will increase in price of $50 share. so you decide to purchase a lune Call option for 100 shares for a 30 day time limit. Assume that I call option contract equals to 100 shares and the call premium per share is $2/share. (6 points total) a) Are you the long call or short call option? are you the buyer or seller? b) How much will you spend for the entire call option...
Need help on Question 9. & 10. Thanks
9) Identify the net profit/loss PER CONTRACT for the given option position. Each contract covers 100 shares. Clearly indicate any loss with a negative value. Assume the position is held until expiration. A long SPY 192.50 call (premium $1.36/share). SPY is trading at $197/share at expiration. 10) Identify every breakeven point for the overall option strategy. A ratio call write (stock purchased at $50, 3 short calls with strike = 55 and...
Suppose you are given the following information: Current Price of the GPRO stock: Strike Price of a 1 year call option: Market Price (premium) of the call option: Strike Price of a 1 year put option: Market Price (premium) of the put option: $4.30 $7.00 $0.49 $7.00 $3.08 (a) What is the maximum amount the buyer of the call option can gain (per share)? [2 Points] (b) What is the maximum amount the seller of the call option can lose...
#9. Please help me solve for: "The profit (loss) experienced on
option X" for options A-E. Thanks!
Options profits and losses for each of the 100-share options shown in the following table, use the underlying stock price at expiration and other information to determine the amount of profit or loss an investor would have had, ignoring brokerage fees Option Underlying stock price per share at expiration $51 Type of option Call Call Put Put Call Cost of option $190 $335...
Use the date in Figure 15.1to calculate both the payoff and the
profit or loss per share for the investments in each of the
following July 2017 expiration options, if the stock price on the
expiration date is $72. (Loss amounts should be indicated
by a minus sign. Round Profit/Loss to 2 decimal
places.)
Payoff
Profit/Loss
a.
Call option, X = 70
2.00selected answer correct
(0.02)selected answer incorrect
b.
Put option, X = 70
0.00selected answer correct
(0.24)selected answer incorrect...
1) A call option is priced at $7 with an exercise price of $100 and an underlying stock price of $98. If the stock price at expiry is $102 determine the following: o Option value for a long position o Profit for a long position 2) A put option is priced at $4 with an exercise price of $60 and an underlying price of $62. Determine the following: o Option value for a long position if the stock price at...
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