value and Profit of A. buy 2 calls & buy 1 put, same strike price. B. buy 1 calls & buy 2 put, same stike price...
Homework Answers
- Buy 2 calls & buy 1 put, same strike price.
Buying one call and one put option of same strike price will offset one another and there is no net gain or loss.
But here it is to buy 2 calls & buy 1 put, same strike price.
Therefore,
Value of this strategy will be equal to one call option as one call and one put option will offset one another
Profit from this strategy = Profit on one call option (stock price – strike price) – premium paid for all the three options
- Buy 1 call & buy 2 put, same strike prices.
Buying one call and one put option of same strike price will offset one another and there is no net gain or loss.
But here it is to buy 1 call & buy 2 put, same strike prices.
Therefore,
Value of this strategy will be equal to one put option as one call and one put option will offset one another
Profit from this strategy = Profit on one put option (strike price - stock price) – premium paid for all the three options
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value and Profit of A. buy 2 calls & buy 1 put, same strike price. B. buy 1 calls & buy 2 put, same stike price...
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...
You buy a put option for $10 with a strike of $100. At maturity the price...
You buy a put option for $10 with a strike of $100. At maturity the price of the underlying is $95.What is your profit or loss?
If I buy a put option with a price of $1, with a strike price of...
If I buy a put option with a price of $1, with a strike price of $110, and the stock price ends up being $90, what is my holding period return? How would this return be different if a dividend of 2.5% was received? Subject: Portfolio management
the value of a put and the the value of 8- The higher the strike price,...
the value of a put and the the value of 8- The higher the strike price, the a call, all else being equal. a) higher, higher b) lower; lower c) higher, lower d) lower, higher e) Doesn't move; higher 9-A 5-month European call option on a non-dividend-paying stock has a strike price of $30. The underlying stock is selling for $32 and the risk free rate is 6%. If the market value of the call is $35, is there any...
Strike Price Call Price Put Price 95 7.05 1.81 100 4.11 3.86 105 2.14 6.88 2....
Strike Price Call Price Put Price 95 7.05 1.81 100 4.11 3.86 105 2.14 6.88 2. Start with $0 in your account. a) Short XYZ at $100 and use some of the cash to buy a 95 strike call, investing the rest in zero coupon bonds. b) Construct profit and payoff graphs for this position (ignoring stock borrow fees). c) Instead, borrow enough cash to buy the 95 strike put. d) Construct profit and payoff graphs for this position....
You buy 100 CJC put option contracts with a strike price of 92 at a quoted...
You buy 100 CJC put option contracts with a strike price of 92 at a quoted price of $8. At option expiration, CJC sells for $83.80. What is your net profit on the transaction?
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...
Please explain the answer or steps. Thank you. 21. You write a call option with X S55 and buy a call with X $65. The options are on the same stock and have the same expiration date. One of the calls...
Please explain the answer or steps. Thank you.
21. You write a call option with X S55 and buy a call with X $65. The options are on the same stock and have the same expiration date. One of the calls sells for $3; the other sells for $9. What is the break-even point for this strategy? A) $55 B) $60 CS61 (Ans: Higher the strike, lower the price of the call. Because S55 strike pays over [55 to infinity]...
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."...
5. (6 points) Suppose you bought 2 calls and 1 put option (a strap) each with...
5. (6 points) Suppose you bought 2 calls and 1 put option (a strap) each with a contract size of 125,000. If the put has a strike price of $1.25/ and a premium of $0.015, and the calls have a strike of $1.25/e with a premium of $0.02 each, what is your overall net position (net profit) if the spot rate rises to $1.2940/? (Hint, consider the options separately and add the net proft).
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...
the value of a put and the the value of 8- The higher the strike price, the a call, all else being equal. a) higher, higher b) lower; lower c) higher, lower d) lower, higher e) Doesn't move; higher 9-A 5-month European call option on a non-dividend-paying stock has a strike price of $30. The underlying stock is selling for $32 and the risk free rate is 6%. If the market value of the call is $35, is there any...
Please explain the answer or steps. Thank you.
21. You write a call option with X S55 and buy a call with X $65. The options are on the same stock and have the same expiration date. One of the calls sells for $3; the other sells for $9. What is the break-even point for this strategy? A) $55 B) $60 CS61 (Ans: Higher the strike, lower the price of the call. Because S55 strike pays over [55 to infinity]...
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."...
5. (6 points) Suppose you bought 2 calls and 1 put option (a strap) each with a contract size of 125,000. If the put has a strike price of $1.25/ and a premium of $0.015, and the calls have a strike of $1.25/e with a premium of $0.02 each, what is your overall net position (net profit) if the spot rate rises to $1.2940/? (Hint, consider the options separately and add the net proft).
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