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1. (15 points) Suppose you buy a November expiration call option with exercise price $21. a....
Suppose you buy a May expiration call option on 100 shares (@ $3.80) with the excise...
Suppose you buy a May expiration call option on 100 shares (@ $3.80) with the excise price of $140. a.) If the stock price in May is $152, will you exercise your call? (Yes or No) What is the net profit/loss on your position? What is the rate of return on your position? b.) What if you had bought an May put option on 100 shares with exercise price $140 at a price of ($2.71) instead? Would you exercise the...
Consider the following option portfolio: You write a January 2012 expiration call option on IBM with...
Consider the following option portfolio: You write a January 2012 expiration call option on IBM with exercise price $172, and the price of the call option is $8.93. You also write a January expiration IBM put option with exercise price $167, the price of the put option is $10.85. Instructions: for parts a, b, and c, enter your answer as a decimal rounded to the nearest cent. a. What will be the profit/loss on this position if IBM is selling...
Consider the following option portfolio: You write a January 2012 expiration call option on IBM with...
Consider the following option portfolio: You write a January 2012 expiration call option on IBM with exercise price $170, and the price of the call option is $8.93. You also write a January expiration IBM put option with exercise price $165, the price of the put option is $10.85. Instructions: for parts a, b, and c, enter your answer as a decimal rounded to the nearest cent. a. What will be the profit/loss on this position if IBM is selling...
Suppose you buy a June expiration call option on 30 shares of Apple stock with the...
Suppose you buy a June expiration call option on 30 shares of Apple stock with the exercise price of $240. If the stock price is $256 in June (just before expiration) – would you exercise this option? A. Yes B. No C. Impossible to determine D. You would have to wait until after the expiration date
2. (15 points) Suppose that you traded the following options on Facebook’s stock: a. Sold 1 call...
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...
You bought Stock A at a purchase price of: Call option strike price: Option expiration date:...
You bought Stock A at a purchase price of: Call option strike price: Option expiration date: Price of call option: $25 $35 June 30, 2020 $5 Stock goes up to $50 Stock goes down to $5 A. Profit/Loss on stock if sell now B. Profit/Loss on call option if sell now All other things being equal, would you expect the price of the call option to be higher or lower than $5 for a stock that is identical to Stock...
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...
Refer to the stock options on Apple in the Figure 2.10. Suppose you buy a September...
Refer to the stock options on Apple in the Figure 2.10. Suppose
you buy a September expiration call option on 100 shares with
exercise price $100.
a-1. If the stock price in September is $102,
will you exercise your call?
Yes
No
a-2. What is the net profit/loss on your
position? (Negative value should be
indicated by a minus sign.)
(Click to select)Net Profit/ Net
Loss $
a-3. What is the rate of return on your
position? (Round your answer...
A call option with an exercise price of $70 and three months to expiration has a...
A call option with an exercise price of $70 and three months to expiration has a price of $4.10. The stock is currently priced at $69.80, and the risk-free rate is 5 percent per year, compounded continuously. What is the price of a put option with the same exercise price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Put option price $
Suppose you buy a call option on a $100,000 worth of euros with an exercise price of $1.10 per euro for a premium of $10...
Suppose you buy a call option on a $100,000 worth of euros with an exercise price of $1.10 per euro for a premium of $1000. If on expiration the spot exchange rate is $1.12 per euro, what is your net profit or loss?
Consider the following option portfolio: You write a January 2012 expiration call option on IBM with exercise price $170, and the price of the call option is $8.93. You also write a January expiration IBM put option with exercise price $165, the price of the put option is $10.85. Instructions: for parts a, b, and c, enter your answer as a decimal rounded to the nearest cent. a. What will be the profit/loss on this position if IBM is selling...
You bought Stock A at a purchase price of: Call option strike price: Option expiration date: Price of call option: $25 $35 June 30, 2020 $5 Stock goes up to $50 Stock goes down to $5 A. Profit/Loss on stock if sell now B. Profit/Loss on call option if sell now All other things being equal, would you expect the price of the call option to be higher or lower than $5 for a stock that is identical to Stock...
Refer to the stock options on Apple in the Figure 2.10. Suppose
you buy a September expiration call option on 100 shares with
exercise price $100.
a-1. If the stock price in September is $102,
will you exercise your call?
Yes
No
a-2. What is the net profit/loss on your
position? (Negative value should be
indicated by a minus sign.)
(Click to select)Net Profit/ Net
Loss $
a-3. What is the rate of return on your
position? (Round your answer...
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