Question

Suppose you construct the following European option trades on Apple stock: purchase a put option with...

Suppose you construct the following European option trades on Apple stock: purchase a put option with exercise price $83 and premium $2.79, and purchase a call option with exercise price $95 and premium $4.19. What is your maximum dollar net loss, per share?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose you construct the following European option trades on Apple stock: write a put option with...
Suppose you construct the following European option trades on Apple stock: write a put option with exercise price $33 and premium $1.57, and write a call option with exercise price $33 and premium $4.29. What is your maximum dollar net profit, per share?
Suppose you construct the following European option trades on Microsoft stock: purchase a call option with...
Suppose you construct the following European option trades on Microsoft stock: purchase a call option with an exercise price of $28 and a premium of $12 and write a call option with an exercise price of $62 and a premium of $6. What is your maximum dollar net profit, per share?
1. Tucker Inc. common stock currently trades for $90/share. 6-month European put options on the stock...
1. Tucker Inc. common stock currently trades for $90/share. 6-month European put options on the stock have an exercise price and premium of $93 and $4, respectively. The annual risk free rate is 2%. What should be the value of a 6-month European call option on the stock with an exercise price of $93 according to put-call parity? Round intermediate steps to four decimals and your final answer to two decimals. a. 7.90 b. 0.065 c. 1.93 d. 2.84 e....
5. A put option in finance allows you to sell a share of stock in the...
5. A put option in finance allows you to sell a share of stock in the future at a given price. There are different types of put options. A European put option allows you to sell a share of stock at a given price (called the exercise price) at a particular point in time after the purchase of the option. For example, suppose you purchase an eight-month European put option for a share of stock with an exercise price of...
For a European call option and a European put option on the same stock, with the...
For a European call option and a European put option on the same stock, with the same strike price and time to maturity, which of the following is true? A) Before expiration, only in-the-money options can have positive time premium. B) If you have a portfolio of protected put, you can replicate that portfolio by long a call and hold certain amount of risk-free bond. C) Since both the call and the put are risky assets, the risk-free interest rate...
For a European call option and a European put option on the same stock, with the...
For a European call option and a European put option on the same stock, with the same strike price and time to maturity, which of the following is true? A) When the call option is in-the-money and the put option is out-of-the-money, the stock price must be lower than the strike price. B) The buyer of the call option receives the same premium as the writer of the put option. C) Since both the call and the put are risky...
You want to price a European call option on stock X, which currently trades at $40...
You want to price a European call option on stock X, which currently trades at $40 per share (this stock does not currently pay dividends). Suppose there are two possible outcomes for share prices of stock X next period: It can go up by 15%, or it can drop by 10%. The option expires in one period, and has a strike price of $41. The risk-free rate over the next period is 5% (you can lend and borrow at the...
The price of a stock is $40. The price of a one-year European put option on...
The price of a stock is $40. The price of a one-year European put option on the stock with a strike price of $30 is quoted as $7 and the price of a one-year European call option on the stock with a strike price of $50 is quoted as $5. Suppose that an investor buys 100 shares, shorts 100 call options, and buys 100 put options. a) Construct a payoff and profit/loss table b) Draw a diagram illustrating how the...
Suppose that an investor initially purchases put options on 4000 Apple shares with an exercise price...
Suppose that an investor initially purchases put options on 4000 Apple shares with an exercise price of 100 dollars per share. The cost of the put option is 10 dollars per share. Then at a later date, she purchases call options on 3000 Apple shares with an exercise price of 120 dollars per share and the same expiration date as the put options above. The cost of the call option is 7 dollars per share. a) Determine the total cost...
2. Suppose you purchase a put option to sell IBM common stock at $100 per share...
2. Suppose you purchase a put option to sell IBM common stock at $100 per share in September. The current price of IBM is $85 and the option premium is $10. a. What is the intrinsic value of this option? As the expiration date on the option approaches, what will happen to the size of the option premium? b. What would be in intrinsic value if this was a call option?