Question

Refer to the stock options on Apple in the Figure 2.10. Suppose you buy a September expiration call option on 100 shares with exercise price $100.

a-1. If the stock price in September is $102, will you exercise your call?

	Yes
	No

a-2. What is the net profit/loss on your position? (Negative value should be indicated by a minus sign.)

(Click to select)Net Profit/ Net Loss            $

a-3. What is the rate of return on your position? (Round your answer to 2 decimal places.)

Rate of return             %

b-1. Would you exercise the call if you had bought the September call with the exercise price $95?

	Yes
	No

b-2. What is the net profit/loss on your position? (Input the amount as a positive value.)

(Click to select)Net loss/ Net profit            $

b-3. What is the rate of return on your position? (Round your answer to 2 decimal places.)

Rate of return             %            

c-1. What if you had bought a September put with an exercise price of $100 instead? Would you exercise the put at a stock price of $100?

	Yes
	No

c-2. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)

Rate of return             %

Apple (AAPL) Underlying stock price $101.05 Expiration Strike Call Put September 95 6.20 0.21 October 95 6.35 0.33 September 100 2.20 1.18 October 100 2.62 1.55 September 105 0.36 4.35 October 0.66 105 4.75

Answer 1

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NPV. IRR. PBP.OCEINDEX Microsoft Excel (Pro File Home Insert Page Layout Formulas Data Review View Add-Ins - Cut AutoSum A A Wrap Text Calibri 11 General Fill Copy Conditional Format Formatting A Merge & Center Insert Delete Format Paste S % Cell Sort & Find & 2 Clear Format Painter er Select ble Styles Clipboard Font Alignment Number Shules Cells Editing Ca501 CP CH CI CI CK CL CM CN CO CO CR CS CT CL C' 494 COST APPLE EACH CONTRACT IS OF 100 SHARES 495 220 100 X 2.20= 496 497 a-1 STOCK PRICE SEPT -102, EXERCISE PRICE = 100 498 YES BECAUSE PRICE ON EXPIRY > EXERCISE PRICE 499 PROFIT = (102-100)*100 220 = -20 500 a-2 501 -20/220 100 = RATE OF RETURN 502 a-3 9.09% 503 b-1 YES 504 BECAUSE PRICE ON EXPIRY > EXERCISE PRICE 505 I ASSUME HERE STOCK PRICE =102 COST 506 b-2 EACH CONTRACT IS OF 100 SHARES 100 X 6.20 507 620 508 509 PROFIT (102-95)*100 - 620 80 510 b-3 RATE OF RETURN [80/620 100 ]= 511 12.90% 512 CURRENCY LOAN CROSS OVER HEDGING MONEY MARKET GM HPR AM OCF CASH FLOW STATW FCF ARM, MSI,confidencelINDEX TAX GROWTH SUST PREF AND DIV POLICY 130% Re erences 04:33 m TENG 13-06-2019

NPV, IRR, PBP,OCF,INDEX Microsoft EXcel (Pro File Home Insert Page Layout Formulas Data Review View Add-Ins - Cut AutoSum A A Wrap Text Calibri 11 General Fill Copy Conditional Format Formatting A Merge & Center Insert Delete Format Paste BIU S % Cell Sort & Find & 2 Clear Format Painter ble Styles er Select Clipboard Font Alignment Number Shules Cells Editing CL525 CH CI CI CK CL CM CN CO CP CQ CR CS CT CL C' 512 THE STOCK PRICE & STRIKE PRICE ARE SAME 513 C-1 NO 514 C-2 $ 515 COST OF PUT = 100 X 1.18 118 516 517 AS WE DID NOT EXERCISE THE PUT LOSS PREMIUM -118 518 519 [-118/118 100]= RATE OF RETURN 520 -100.00% 521 522 523 524 525 526 527 528 529 530 14 H OCF CASH FLOW STATW FCF CROSS OVER HEDGING MONEY MARKET GM HPR AM CURRENCY LOAN ARM, MSI,confidencelINDEX TAX GROWTH SUST PREF AND DIV POLICY 130% Re erences 04:34 ENG 13-06-2019