Question

Both a call and a put currently are traded on stock XYZ; both have strike prices of $50 and maturities of six months.

**a.** What will be the profit/loss to an investor who
buys the call for $4 in the following scenarios for stock prices in
six months? **(Loss amounts should be indicated by a minus
sign.)**

Stock Price | Profit/Loss | ||

a. | $40 | $ | |

b. | $45 | ||

c. | $50 | ||

d. | $55 | ||

e. | $60 | ||

**b.** What will be the profit/loss in each
scenario to an investor who buys the put for $6? **(Loss
amounts should be indicated by a minus sign.)**

Stock Price | Profit/Loss | ||

a. | $40 | $ | |

b. | $45 | ||

c. | $50 | ||

d. | $55 | ||

e. | $60 | ||

Answer #1

Both a call and a put currently are traded on stock XYZ; both
have strike prices of $50 and maturities of six months.
A) What will be the profit to an investor who buys the call for
$4 in the following scenerios for stock prices in six months? ($40)
($45) ($50) ($55) ($60)
B) What will be the profit in each scenario to an investor who
buys the put for $6?

Both a call and a put currently are traded on stock Xue; both
have strike prices of $50 and maturities of 6 months.
What will be the profit/loss to an investor who buys one
call contract at $3 a share? How about for the person who
buys one put contract for $6.50 a share? [Hint:
profit= value of the option at expiration- initial cost]
Scenario
Call option: Profit/Loss
Put option: Profit/Loss
$40
$45
$50
$55
$60

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...

You bought a call option on July 27,
2020 at the exercise price of $65. It expires on October 26, 2020.
The stock currently sells for $66., while the call option sells for
$6.
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...

Three put options on a stock have the same expiration date and
strike prices of $50, $60, and $70. The market prices are $3, $5,
and $9, respectively. Lou buys the $50 put, buys the $70 put and
sells two of the $60 puts. Lou's strategy potentially makes money
(i.e. positive profit) in which of the following price ranges?
$40 to $50
$55 to $65
$85 to $95
$70 to $80

Three put options on a stock have the same expiration date and
strike prices of $50, $60, and $70. The market prices are $3, $5,
and $9, respectively. Harry buys the $50 put, buys the $70 put and
sells two of the $60 puts. Harry's strategy potentially makes money
(i.e. positive profit) in which of the following price ranges?
$70 to $80
$85 to $95
$40 to $50
$55 to $65

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...

Three put options on a stock have the same expiration date and
strike prices of $55, $60, and $65. The market prices are $3, $5,
and $8, respectively. Alice buys the $55 put, buys the $65 put and
sells two of the $60 puts. For what range of stock prices would
this trade lead to a loss?
greater than $64 or less than $55.
greater than $64 or less than $56.
greater than $65 or less than $56.
greater than...

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...

Three put options on a
stock have the same expiration date and strike prices of $50, $60,
and $70. The market prices are $3, $5, and $9, respectively. Alice
buys the $50 put, buys the $70 put and sells two of the $60 puts.
What is the maximum loss that Alice can face?
$2
$1
$3
Infinity

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