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Exercise 1. An investor has a short position in a European put on a share for $4. The stock price is $40 and the strike price is $41 Under what cicum be cuercise (b) Under what circumstance does the...
An investor sells a European call on a share for $13. The strike price is $36. Under what circumstances does the in...
An investor sells a European call on a share for $13. The strike price is $36. Under what circumstances does the investor make a profit? Under what circumstances will the option be exercised? Draw a diagram showing the variation of the investor's profit with the stock price at the maturity of the option.
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...
An investor sells a European call on a share for S3 The stock price is $26...
An investor sells a European call on a share for S3 The stock price is $26 and the strike price is $29. Under what circumstanc 4- es does the investor make a profit? Under what circumstances will the option be exercised? Draw a diagram showing the variation of the investor's profit with the stock price at the maturity of the option.
Under what circumstances does the price of the call equal the price of the put?
A trader buys a European call option and sells a European put option. The options have the same underlying asset, strike price, and maturity. Describe the trader’s position. Under what circumstances does the price of the call equal the price of the put?
A protective put consists of a long put strike at 4, premium of $3.5, and a...
A protective put consists of a long put strike at 4, premium of $3.5, and a long stock that was bought at $38. What is the profit of the protective put if the stock price is? a. $35? b. $42? An investor sells a European call on a share for $13. The strike price is $36. Under what circumstances does the investor make a profit? Under what circumstances will the option be exercised? Draw a diagram showing the variation of...
g) European call with a strike price of $40 costs $7. European put with the same...
g) European call with a strike price of $40 costs $7. European put with the same strike price and expiration date costs $6. Assume that you buy two calls and one put (strap strategy). Sketch the graph and write down functions of payoff and profit h) Consider a stock with a price of $50 and there is European put option on that stock with the strike of $55 and premium of $4. Assume that you buy 1/3 of a stock...
A trader buys a European call option and sells (short) a European put option. The options...
A trader buys a European call option and sells (short) a European put option. The options have the same underlying asset, strike price, and maturity. Describe the trader’s position. The trader monitors the market continuously and finds at one point that the call is significantly overpriced relative to fair value. What strategy is available for the trader to lock in a profit at current prices?
1. Apple call options strike $330.00 is trading at $127.50 today. Under what circumstances does the...
1. Apple call options strike $330.00 is trading at $127.50 today. Under what circumstances does the investor of a long call make a profit? Under what circumstances will the option be exercised? Draw a diagram showing the variation of the investors profit with the stock price at the maturity of the option. hint: K = 330 C=127.50 Long call profit: St-K-c>0 , 2. Apple put options strike $460 is trading at $6.35 today. Under what circumstances does the investor make...
Suppose a June put option on a stock with a strike price of $60 costs $4...
Suppose a June put option on a stock with a strike price of $60 costs $4 and is held until June. Under what circumstance will the holder of the option make again? Under what circumstance will the option be exercised? Draw a diagram showing how the profit on a short position in the option depends on the stock price at maturity of the option. NB: show data for the graph, please. i need to know how it was gotten so...
Assume the following premia: Strike $950 Call $120.405 93.809 84.470 71.802 51.873 Put $51.777 74.201 1000...
Assume the following premia: Strike $950 Call $120.405 93.809 84.470 71.802 51.873 Put $51.777 74.201 1000 1020 84.470 101.214 1050 1107 137.167 I 1) Suppose you invest in the S&P stock index for $1000, buy a 950-strike put, and sell a 1050- strike call. Draw a profit diagram for this position. What is the net option premium? 2) Here is a quote from an investment website about an investment strategy using options: One strategy investors apply is a "synthetic stock."...
An investor sells a European call on a share for $13. The strike price is $36. Under what circumstances does the investor make a profit? Under what circumstances will the option be exercised? Draw a diagram showing the variation of the investor's profit with the stock price at the maturity of the option.
An investor sells a European call on a share for S3 The stock price is $26 and the strike price is $29. Under what circumstanc 4- es does the investor make a profit? Under what circumstances will the option be exercised? Draw a diagram showing the variation of the investor's profit with the stock price at the maturity of the option.
A protective put consists of a long put strike at 4, premium of $3.5, and a long stock that was bought at $38. What is the profit of the protective put if the stock price is? a. $35? b. $42? An investor sells a European call on a share for $13. The strike price is $36. Under what circumstances does the investor make a profit? Under what circumstances will the option be exercised? Draw a diagram showing the variation of...
g) European call with a strike price of $40 costs $7. European put with the same strike price and expiration date costs $6. Assume that you buy two calls and one put (strap strategy). Sketch the graph and write down functions of payoff and profit h) Consider a stock with a price of $50 and there is European put option on that stock with the strike of $55 and premium of $4. Assume that you buy 1/3 of a stock...
Assume the following premia: Strike $950 Call $120.405 93.809 84.470 71.802 51.873 Put $51.777 74.201 1000 1020 84.470 101.214 1050 1107 137.167 I 1) Suppose you invest in the S&P stock index for $1000, buy a 950-strike put, and sell a 1050- strike call. Draw a profit diagram for this position. What is the net option premium? 2) Here is a quote from an investment website about an investment strategy using options: One strategy investors apply is a "synthetic stock."...
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