The value of a listed put option on a stock is higher when: The exercise price...
The value of a listed put option on a stock is higher
when:
- The exercise price is higher.
- The contract approaches maturity.
- The stock decreases in value.
- A stock split occurs.
Multiple Choice
-
I, II, and III only
-
II, III, and IV only
-
I, II, III, and IV
-
I and III only
Homework Answers
Price of put increases with increase in exercise price or decrease in stock price
I and III only
Add Answer to:
The value of a listed put option on a stock is higher
when:
The exercise price...
The value of any option (both call and put options) is positively related to the I)...
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Problem-04a: You purchase (long position) 15 European put option contracts on BBB stock at the premium...
Problem-04a: You purchase (long position) 15 European put option contracts on BBB stock at the premium of $6.80. The exercise price of the option is $75, the maturity of the options is 2-month, and stock is currently trading at $75. i. What is the payoff of your position if the stock price at maturity is $70? Show your result numerically. ii. Repeat i. for the stock price at maturity of $83. Problem-04b: For the problem-04a: i. What is the profit...
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In referring to the Black-Scholes formula for pricing a European put option on a dividend paying stock, which of the following statements are true? I. The put price increases as the strike decreases II. The put price increases as volatility increases III. The put price increases as the dividend decreases a) I only c) I and II e) I, II and III b) Il only d) II and III
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Problem-03a: You sell (short position) 12 European call option contracts on ZZZ stock at the premium of $8.5. The exercise price of the option is $100, the maturity of the options is 3-month, and the stock currently is trading at $98. i. What is the payoff of your position if the stock price at maturity is $105? Show the result numerically. ii. Repeat i. for the stock price at maturity of $93. Problem-03b: For problem-03a: i. What is the profit...
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