Microsoft May 2020 (1 year) 130 (strike price) calls are selling for 12.00 ( 1 contract is for 100 shares, so $1,200) at time when Microsoft has a market value of 134 per share and risk free rate is 3.0%. Microsoft pay no dividends. What would be the Market price of Microsoft May 2020 puts with a strike price of 130 ?
According to the Put-call Parity
Put Price + Stock Price = Call Price + [Strike Price / (1 + r)n]
Put Price = Call Price + [Strike Price / (1 + r)n] - Stock Price
= $12 + [$130 / (1 + 0.03)] - $134
= $12 + $126.21 - $134
= $4.21
Microsoft May 2020 (1 year) 130 (strike price) calls are selling for 12.00 ( 1 contract is for 100 shares, so $1,200) at...
1)The current spot price is $100. You observe 90 Calls selling for $5 and 110 Puts selling for $5. Is there an arbitrage possibility? If so, how would you take advantage of it? What are your potential profits? 2)The current spot price is $100. You observe ATM Calls selling for $10 and ATM Puts selling for $7. Does Put-Call Parity hold? a.Given the call price, how much should a put sell for? b.Given the put price, how much should a...
please just do question 7. thank you Silicon MicroSystems, Inc. (SMSI) stock is currently selling for $100 and the firm pays no dividends. The stock's volatility is 0.30 and the risk-free rate is 8%. Consider the following 6-month call and put options on SMSI stock (assume that contract size is 1 share): 6. Call 1 Call 2 Call 3 Strike $90 Price $12.817 $6.999 $3.380 Delta Gamma $100$110 0.7690.548 0.333 ma 0.0180.024 0.022 Put 1 90 Put 2 Put 3...
1. A trader has a put option contract to sell 100 shares of a stock for a strike price of $60. What is the effect on the terms of the contract of (a) A $2 dividend being declared (b) A $2 dividend being paid (c) A 5-for-2 stock split (d) A 5% stock dividend being paid. 1. A trader has a put option contract to sell 100 shares of a stock for a strike price of $60. What is the...
The value of the shares of company A is currently at S0 = 500. The annual risk-free interest rate is 6% per annum (continuous compound). This company pays a dividend of 50 euros semiannually. The next payment will be made within 4 months Calculate the current value of dividends Answer Calculate the price of the future for a five-month contract. Reply Calculate the value of the contract within a month if the strike (future transaction price) is K = 450...
covered call writer break even at (4) The current price of an asset is $100, An out-of-the-money American put option with an exercise price of $90 is purchased along with'the asset. If the breakeven point for this hedge is at an asset price of $114 at expirationjwhatis the value of the American put at the time of purchase? (5) A stock index fiutures what is your per-share gain or loss? ying two calls and one put on ABC stock, all...
Problem 15-8 Concord Mills Ltd. had the following shareholders' equity at January 1, 2020. Preferred shares, 8%, $100 par value, 10,000 shares authorized, 3,400 shares issued Common shares, $2 par value, 200,000 shares authorized, 70,000 shares issued Common shares subscribed, 9,400 shares Contributed surplus-preferred Contributed surplus-common Retained earnings $340,000 140,000 18,800 17,000 934,000 769,000 2,218,800 34,000 $2,184,800 Less: Common share subscriptions receivable Total shareholders' equity The contributed surplus accounts arose from amounts received in excess of the par value of...
On January 1, 2019, Rosewood Corp. purchased a put option on shares of ICM stock. Terms of the contract were as follows: Number of shares: 100 Strike price: $240 per share Expiration date: May 31, 2019 Total cost of the option contract: $100 Seller of the option contract: First Investment Bank On January 1, 2019, ICM stock was trading at $240 per share. The following additional information is known: On March 31, 2019, the price of ICM stock was $210...
Assignment 1 (assessment worth 10%) Due Date Monday 8th May by 5pm GMT+8 [Submission will be strictly observed. Make submission via Turnitin] Question 1 An Australian investor holds a one month long forward position on USD. The contract calls for the investor to buy USD 2 million in one month’s time at a delivery price of $1.4510 per USD. The current forward price for delivery in one month is F= $1.5225 per USD. Suppose the current interest rate interest is...
Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $114, and the size of each contract is 100 shares. a. Suppose you buy 10 contracts of the February 110 call option. How much will you pay, ignoring commissions? b-1. Suppose you buy 10 contracts of the February 110 call option and also suppose that Macrosoft stock is selling for $140 per share on the expiration date. How much is your...