Question

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 |

Answer #1

Call options gives it's buyer right to buy underlying at specified price in future where as Put options gives it's buyer right to sell underlying at specified price in future

Statement showing profit or loss if inestor bought call option with strike price of $50 @3$

Price as at expiry | Profit on call option Strike price = 50$ |
Premium paid | Net profit & Loss |

A | B | C = A- B | |

40 | 0 | 3 | -3 |

45 | 0 | 3 | -3 |

50 | 0 | 3 | -3 |

55 | 5 | 3 | 2 |

60 | 10 | 3 | 7 |

Statement showing profit or loss if inestor bought call option with strike price of $50 @6.5$

Price as at expiry | Profit on put option Strike price = 50$ |
Premium paid | Net profit & Loss |

A | B | C = A- B | |

40 | 10 | 6.5 | 3.5 |

45 | 5 | 6.5 | -1.5 |

50 | 0 | 6.5 | -6.5 |

55 | 0 | 6.5 | -6.5 |

60 | 0 | 6.5 | -6.5 |

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 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...

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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
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Option Market Price
Call Option
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$1
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sells the call with the $50 strike price if at the expiration stock
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f. Estimate profit and loss if the...

You bought a call option on July 27,
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The stock currently sells for $66., while the call option sells for
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A stock that is currently selling
for $47 has the following six-month options
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Strike Price
Market Price
Call Option
$45
$4
Call Option
$50
$1
Which option(s) is (are) in the money?
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40 strike call option:
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40 strike put option: $2
45 strike call option:
$4
45 strike put option: $4
50 strike call option:
$2
50 strike put option: $9
55 strike call option:
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1. Consider options on Alpha Corporation stock. There are call
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The following prices are available for call and put options on a
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March (calls)
June (calls)
March (puts)
June (puts)
45
6.84
8.41
1.18
2.09
50
3.82
5.58
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1.89
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Use this information to answer the following questions. Assume
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The following prices are available for call and put options on a
stock priced at $50. The risk-free rate is 6 percent and the
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the June options have 180 days remaining.
Calls
Puts
Strike
March
June
March
June
45
6.84
8.41
1.18
2.09
50
3.82
5.58
3.08
4.13
55
1.89
3.54
6.08
6.93
Use this information to answer the following questions. Assume
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A
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identify the arbitrage oppotunity to a trader.

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