Question

Given the following information,

price of a stock | $39 | |

strike price of a six-month call | $35 | |

market price of the call | $ 8 | |

strike price of a six-month put | $40 | |

market price of the put | $ 3 | |

finish the following sentences.

a. | The intrinsic value of the call is _________. |

b. | The intrinsic value of the put is _________. |

c. | The time premium paid for the call is _________. |

d. | The time premium paid for the put is _________. |

At the expiration of the options (i.e., after six months have lapsed), the price of the stock is $45. | |

e. | The profit (loss) from buying the call is _________. |

f. | The profit (loss) from writing the call covered (i.e., buying the stock and selling the call) is _________. |

g. | The profit (loss) from buying the put is _________. |

h. | The profit (loss) from selling the stock short is _________. |

i. | The maximum possible loss from buying the put is _________. |

j. |
At expiration, the time premium paid for a put or a call is _________. |

Answer #1

(a) Intinsic Value of the call is the difference between the curent Market price of the stock and Strike price of Call.

= $39-$35

=$4

The intrinsic value of the call is $4.

(b) The Intrinsic value of Put is $1

The difference between strike price of Put option and current Market price of the stock.

(c) Time Premium paid for the Call is the difference between Market price of the call and Intrinsic value of the Call

The tiem premium paid for the call is $4

(d) The Time premium paid of the put is $2

The difference between Market put and Intrinsic

The price of a stock is $61 and a call option with a strike
price of $60 sells for $5 (i.e.,
the option premium is $5.). *SHOW WORK*
(a) What is the option’s intrinsic value?
(b) What is the option’s time premium?
(c) You purchased the call for $5. If, at the expiration of the
call, the price
of the stock is $66, what is the profit (or loss) from buying
the call?
(d) You purchased the call for $5....

The price of a stock is $58. You can buy a six-month call at $57
for $4 or a six-month put at $57 for $2.
What is the intrinsic value of the call? Round your answer to
the nearest dollar.
$
What is the intrinsic value of the put? Round your answer to the
nearest dollar.
$
What is the time premium paid for the call? Round your answer to
the nearest dollar.
$
What is the time premium paid...

Sugar Land stock is selling for $47 and has the following
six-month options outstanding.
Strike Price
Option Market Price
Call Option
$45
$4
Call option
$50
$1
e. Estimate profit and loss if the investor buys the stock and
sells the call with the $50 strike price if at the expiration stock
price are: $30, $50, $55, and $65 . What is the breakeven stock
price at expiration for investor to make profits?
f. Estimate profit and loss if the...

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$140 and a put premium of $17.35. The stock price at expiration is
$115.00. What is your profit or loss?
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$195 and a put premium of $0.95. The stock price at expiration is
$190.50. What is your profit or loss?
-You took a “bear spread” position on the VXX EFT by buying...

b. A stock that is currently selling
for $47 has the following six-month options
outstanding:
Strike Price
Market Price
Call Option
$45
$4
Call Option
$50
$1
Which option(s) is (are) in the money?
Which option(s) is (are) at the money?
Which option(s) is (are) out of the money?
What is the profit (loss) at expiration given different prices
of the stock ($30, $35, $40, $40, $45, $50, $55, and $60) if the
investor buys the call with $50 strike...

. A stock is currently selling for $20.65. A 3-month
call option with a strike price of $20 has an
option premium of $1.3. The risk-free rate is 2 percent and the
market rate is 8 percent. What is the option premium on a 3-month
put with a $20 strike price? Assume the options
are European style.

A stock is currently selling for $40.85. A 3-month call option
with a strike price of $40 has an option premium of $1.30. The
risk-free rate is 2 percent and the market rate is 9.5 percent.
What is the option premium on a 3-month put with a $40 strike
price? Assume the options are European style.

Intel stock price is $21 and Intel stock put
option with a strike price X=$25 and August expiration has
a premium P=$5.5 as of right now. You just bought the put
option at P=$5.5 and will hold it till the expiration date.
1) For the option premium, how much are the intrinsic value and
time value? (4 points)
2) What would be your profit / loss if the stock price of Intel
is $30 on the expiration date? (3 points)...

Jorge purchased a six-month put on CPZ stock at a cost of $150.
The strike price was $17. At what market price does Jorge just
break-even on this investment? Ignore transaction costs and
taxes.
$15.50
$16.50
$17
$17.50
Phil is a bond fund manager. To hedge the bond portfolio against
rising interest rates, Phil should:
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-sell interest rate futures.
Colleen has been trying to figure out what to do...

Buying a Straddle: Betty buys a straddle on Lehigh that has a
strike price of $40.75. The premium of the call is
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