Question

Note - all Calls and Puts are lots of 100 shares and Price at expiration is $50.

What is your profit from the following transaction (note per share costs quoted). Profit is how much you made or how much you didn't lose.

Short Call | $38 | Strike Price | |

$10 | premium received |

Answer #1

The current price of Stock A is $305/share. You believe that the
price will change in the near future, but your are not sure in
which direction. To make a profit from the price change, you
purchase ONE call option contract (each contract has 100 calls) and
TWO put option contracts (each contract has 100 puts) at the same
time. The call option and the put option have the same expiration
date. The strike price of the call option is...

The current price of Stock A is $305/share. You believe that the
price will change in the near future, but your are not sure in
which direction. To make a profit from the price change, you
purchase ONE call option contract (each contract has 100 calls) and
TWO put option contracts (each contract has 100 puts) at the same
time. The call option and the put option have the same expiration
date. The strike price of the call option is...

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...

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
volatility is 0.35. The March options have 90 days remaining and
the June options have 180 days remaining.
Strike
March (calls)
June (calls)
March (puts)
June (puts)
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
that each transaction consists of...

A) Assume you bought 100 shares of stock DEF at a price of
$30/share. Now, the price has risen to $80/share. Assume 3-month
80-strike puts on DEF cost $6/share and 3-month 80-strike calls on
DEF cost $7/share. If you want to fully protect your gains for the
next 3 months using options, what could you do? B) If you implement
this option strategy, what would your net profit or loss be
(ignoring transaction costs) if DEF falls to $50? C)...

q 12
"You are evaluating
European puts and calls with same strike price that are expring in
six months on a certain stock. Your evaluation reveals that sum of
call price and present value of strike equals $35.5; and sum of put
price and current stock price equals to $37. Which positions do you
need on the call, the put and stock for an arbitrage profit?"
"Buy the put, buy the
stock and write the call"
Write the call and...

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
volatility is 0.35. The March options have 90 days remaining and
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
that each transaction consists of one contract...

You are looking at option prices on calls and puts and noticed
that Biogen Idec (BIIB) is currently selling at $319.55. You look
up the price of a call and a put with a strike price of $300 and
maturing in 6 months. The price of the call is $40.80 and the put
is $19.25. Assume BIIB does not pay a dividend. You also noticed
the risk free rate is 2% per annum with continuous compounding for
the next six...

The recent price per share of Company X is $50 per share. Verna
buys 100 shares at $50. To protect against a fall in price, Verna
buys 100 put, covering 100 shares of Company X, with a strike price
of $40. The put premium is $1 per share. If Company X closes at $45
per share at the expiration of the put, and Verna sells her shares
at $45. What would be Verna's total profit and loss from investing
in...

The current price of one share of NewTech Inc. (NTI) 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. Smith and Armstrong Holding (SAH) has asked you to
act on its behalf and purchase 100 shares of NTI stock, short 100
call options,...

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