Question

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

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

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
The recent price per share of Company X is $102 per share. You buy 100 shares...
The recent price per share of Company X is $102 per share. You buy 100 shares at $50. Meanwhile, you sell 100 shares of calls with a strike price of $102. The call premium is $1 per share. If Company X closes at $82 per share at the expiration of the call, and you sells all the 100 shares at $82. What would be the total profit and loss from investing in the stock and investing in the option?
The current price of Stock A is $305/share. You believe that the price will change in...
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 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...
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...
A) Assume you bought 100 shares of stock DEF at a price of $30/share. Now, the...
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)...
The following prices are available for call and put options on a stock priced at $50....
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...
q 12 "You are evaluating European puts and calls with same strike price that are expring...
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 recent price per share of Company X is $50 per share. Verna buys 100 shares...
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 following prices are available for call and put options on a stock priced at $50....
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)...
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...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT