Question

Sample homework questions:

Given you are short 50 contracts on a 2-year 50-call options Apple. How much will your option position increase in value if Apple stock price goes down by $2 (use negative number if value decreases).

Answer #1

Short 50 contract | ||||||

time 2 year | ||||||

50 call option per contract | ||||||

Total number of option = 50*50 = 2500 | ||||||

Short option = 2500 | ||||||

If Apple stock price goes down by $2 then it will be benefitted | ||||||

for the call option on whicj the position is short. | ||||||

Accordingly the gain will be $2.5 | ||||||

So total gain will be 2.5*2500
= |
6250 |
|||||

Suppose you are short 50 contracts on a 2-year 50-call option on
TSLA and long 10 contracts on TSLA stock. How much will your option
position increase in value if TSLA stock price goes down by $1 (use
negative number if value decreases).

Suppose you are short 50 contracts on a 2-year 50-call option on
TSLA and long 25 contracts on TSLA stock. How much will your option
position increase in value if TSLA stock price goes down by $1 (use
negative number if value decreases).

Suppose you are short 50 contracts on a 2-year 50-call option on
TSLA and long 25 contracts on TSLA stock. How much will your option
position increase in value if TSLA stock price goes down by $1 (use
negative number if value decreases).

Suppose you are short 50 contracts on a 2-year 50-call option on
TSLA. How much will your option position increase in value if TSLA
stock price goes up by $3 (use negative number if value
decreases).

Suppose you are short 50 contracts on a 2-year 50-call option on
TSLA and long 10 contracts on TSLA stock. How much will your option
position increase in value if TSLA stock price goes up by $1 (use
negative number if value decreases). Keep answer in 4 decimal.

Suppose you are long 100 contracts on a 1-year 25-put
option on AMZN. How much will your option position increase in
value if AMZN stock price goes down by $1 (use negative number if
value decreases).
Suppose you are long 100 contracts on a 1-year 25-put
option on AMZN. How much will your option position increase in
value if AMZN stock price goes up by $1 (use negative number if
value decreases).
Suppose you are short 50 contracts on a...

You wrote one of the $100 Apple call option contracts with a
premium of $10.00. You kept your position until the expiration
date, when Apple Stock has a market value of $117.00, at that point
you have a profit of $_____________ from this transaction.
Recall that each contract includes 100
shares. Enter a negative
number for losses. Enter your answer in the box
below. Round your answer to two
decimals.

You bought one of the $100 Apple call option contracts with a
premium of $4.41. You kept your position until the expiration date,
when Apple stock sells for $95, at that point you have a profit of
$_____________ from this transaction. Recall that each
contract includes 100
shares. Enter a negative
number for losses. Enter your answer in the box
below. Round your answer to two
decimals.

A trader uses delta hedging strategy to hedge a portfolio of
short positions in call option on Apple Computer stocks. The trader
sells 50 call option contracts (1 contract controls 100 shares) on
Apple stock. The option price is $5, the stock price is $230, and
the option’s delta is 0.8.
a. Does the trade short or long the stock to create a delta-neutral
position? (Sample answer: long; or short)
b. How many shares does the trader need to create...

Sample homeworks questions:
Apple stock price is currently at $800. The $1000-strike
European Apple call option expiring on December 18, 2020 has delta
of 0.45. N(d2) of the option is 0.25. Assume zero interest rate and
no dividend. Compute the Black-Merton-Scholes value of the call
option."

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