A speculator purchased a call option with an exercise price of $30 for a premium of $4. The option was exercised a few...
The current market price of a share of Disney stock is $30. If a call option on this stock has a strike price of $35, the call is out of the money. is in the money. can be exercised profitably. is out of the money and can be exercised profitably. is in the money and can be exercised profitably. The maximum loss for a writer of a put option on a stock is unlimited. equal to the exercise price. equal...
Assume you are looking at a call option on Bristol Cities Inc. with an exercise price of $104. Current stock price today is $102 and the option has a premium of $3. What will be the profit or loss earned by the speculator at prices of $101, $104 and $112 just before time of expiry? Assume the option will not be exercised until maturity.
6. A call option has an exercise price of $45 and a premium of $4. If the price of the underlying stock is $60, the total payoff of the option is ____? 7. A put option has an exercise price of $20 and a premium of $2. If the price of the underlying stock is $11, what of the total payoff of the option? 8. You write a call option with an exercise price of $67 and a premium of...
A speculator buys a call option with a strike of $50 for $2.61. The stock is currently priced at $51.06 and moves to $52.32 on the expiration date. The speculator will exercise the option on the expiration date (if it is feasible to do so). What is the speculator's profit or loss per share? (Do not ignore the premium paid.) Blank 1. Calculate the answer by read surrounding text.
13. The premium on a pound put option is $.03 per unit. The exercise price is s1.60. The break-even point for the buyer and seller is? (Assume put option are speculators.) zero transactions costs and that the buyer and seller of the 14. You purchase a call option on pounds for a premium of $.03 per unit, with an exercise price of $1.64; the option will not be exercised until the expiration date, if at all. If the spot rate...
25. You buy a call option on Boeing Corp with an exercise price of $40 and an expiration date in September, and you write a call option on Boeing Corp with an exercise price of $40 and an expiration date in October. This strategy is called a A. Time spread B. Long straddle C. Short straddle D. Money spread E. None of the above 26. The maximum loss a buyer of a stock's call option can suffer is A. The...
6- On January 11, I purchased a call option on Exxon at a premium of $14.5, exercise price of $50 and March 15, maturity. On January 21,I decide to close my position by buying a put option on Exxon at a premium of $8.5, exercise price of $50 and March 15, maturity. Is my original position closed? Comment critically. PS: In all questions above X denotes the exercise price of the options, C=call premium, P=put premium, and S=stock price.
Suppose you construct the following European option trades on Apple stock: write a put option with exercise price $32 and premium $2.86, and write a call option with exercise price $32 and premium $3.51. What is your maximum dollar net profit, per share?
questions 25-28 please 25. You buy a call option on Boeing Corp with an exercise price of $40 and an expiration date in September, and you write a call option on Boeing Corp with an exercise price of $40 and an expiration date in October. This strategy is called a A. Time spread B. Long straddle C. Short straddle D. Money spread E. None of the above 26. The maximum loss a buyer of a stock's call option can suffer...
EXplain 21, and 22.*(DOUBLE-WEİGHD Suppose a call option on a given stock has premium $4 per share, and the put option at the same exercise price (E-$100) has premium $3 per share. The price of a Treasury security having the same maturity as the option is.9800 (dollars per face). a. What would you expect the price of the underlying security to be? b. Illustrate with a graph the profit or payoff profile that would result from a "covered call" (write...