Question

A call option on Target stock currently has a price of $4, a strike price of $60, and an expiration date in 30 days. If Mr. Anderson sells a call option contract, plot the (net) profit (Y axis) of this call option contract against the stock price (P; X axis). Show the calculations of key points.

Answer #1

Mr. Henderson buys a share of Intel stock at $60. Plot the
profit (Y axis) of this stock against the stock price (P). Show the
calculations of key points.

A six month call option on Harkonnen
BioSands stock with a strike of 50 currently sells for 3. A put
option with the same strike and expiration date sells for 2. The
interest rate is 2.5 percent. Harkonnen currently sells for 52 per
share.
Given all this, explain your arbitrage strategy and how much
money you expect to make.

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)...

CoStar Group stock price is $590 and the premium for September
CoStar stock call option with strike price X=$550
is $45.30. You just wrote the call option
for C=$45.30.
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 Google
is $525 on the expiration date? (3 points)
3) What would be your profit / loss if the stock price...

Consider a call option on a stock, the stock price is $29, the
strike price is $30, the continuously risk-free interest rate is 5%
per annum, the volatility is 20% per annum and the time to maturity
is 0.25.
(i) What is the price of the option? (6 points)
(ii) What is the price of the option if it is a put? (6
points)
(iii) What is the price of the call option if a dividend of $2
is expected...

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...

1. You buy a put option with strike price of $25. Currently, the
market value of the underlying asset is $30. The put option premium
is $3.25. Assume that the contract is for 150 units of the
underlying asset. Assume the interest rate is 0%. a. What is the
intrinsic value of the put option? b. What is the time value of the
put option? c. What is your net cash flow if the market value of
the optionsâ€™ underlying...

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...

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

You purchase one SDB $125 strike price call contract (equaling
100 shares) for a premium of $5. You hold the option until the
expiration date, when SDB stock sells for $123 per share. What will
be your payoff at expiry? What will be your profit/loss?
You write one SDB $120 strike price put contract (equaling 100
shares) for a premium of $4. You hold the option until the
expiration date, when SDB stock sells for $121 per share. What will...

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