Question

Short a call option with a strike price of $1.25 and a premium of $0.12. Long a call option with a strike price of $1.35 and a premium of $0.02 Short a put option with a strike price of $1.35 and a premium of $0.03 Draw a final contingency graph including breakeven mas loss/gain.

Answer #1

A call option with a strike price of
$1.30/€ and a premium of $0.03/€ is
executed as the market price is $1.39/€. The buyer of the option
has purchased ten contracts (one contract is for €12,500). The
total profit amounts to:
Question options:
€7,500
$7,500
€11,250
$11,250
Question 16 (1 point)
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A trader holds a European put option with a strike price
off $1.30/€ and a premium of $0.05/€. At the expiration date the
market rate is $1.40/€. What...

The premium of a call option with a strike price of $45 is equal
to $5 and the premium of a call option with a strike price of $50
is equal to $3.5. The premium of a put option with a strike price
of $45 is equal to $3. All these options have a time to maturity of
3 months. The risk-free rate of interest is 8%. In the absence of
arbitrage opportunities, what should be the premium of a...

The premium of a call option with a strike price of $45 is equal
to $5 and the premium of a call
option with a strike price of $50 is equal to $3.5. The premium of
a put option with a strike price of
$45 is equal to $3. All these options have a time to maturity of 3
months. The risk-free rate of interest
is 8%. In the absence of arbitrage opportunities, what should be
the premium of a...

The premium of a call option with a strike price of $45 is equal
to $4.5 and the premium of a call
option with a strike price of $55 is equal to $2. The premium of a
put option with a strike price of $45
is equal to $2.5. All these options have a time to maturity of 3
months. The risk-free rate of interest is
6%. In the absence of arbitrage opportunities, what should be the
premium of a...

The premium of a call option with a strike price of $50 is equal
to $6 and the premium of a call
option with a strike price of $60 is equal to $3. The premium of a
put option with a strike price of $50
is equal to $4. All these options have a time to maturity of 6
months. The risk-free rate of interest is
7%. In the absence of arbitrage opportunities, what should be the
premium of a...

The premium of a call option with a strike price of $50 is equal
to $5.5 and the premium of a call option with a strike price of $55
is equal to $4. The premium of a put option with a strike price of
$50 is equal to $3.5. All these options have a time to maturity of
6 months. The risk-free rate of interest is 9%. In the absence of
arbitrage opportunities, what should be the premium of a...

Assume that you buy a call option on euros with a strike price
of $1.25/€ at a premium of 3.80 cents per euro ($0.0380/€) and an
expiration in three months. The option is for €100,000. Calculate
your total profit or loss if you exercise when the euro spot rate
is each of the following: $1.10/€, $1.20/€, $1.30/€, $1.40/€

Which of the following is the riskiest single-option
position?
(a) long the call.
(b) long the put.
(c) short the call.
(d) short the put.
(v) An investor will make a net profit from a call option when
the price of the stock is:
(a) above the strike price.
(b) below the strike price plus the premium.
(c) above the strike price plus the premium.
(d) at the strike.

2. You buy one call with a $50 strike price for $5/option. Draw
a profit/loss graph for the call.
3. You buy one put with a $50 strike price for $5\option. Draw a
profit/loss graph for the call.
4. The trades you did in problems 2 and 3 above together
constitute a straddle. Graph the combined position from problems 2
and 3.

A trader conducts a trading strategy by selling a call option
with a strike price of $50 for $3 and selling a put option with a
strike price of $40 for $4. Please draw a profit diagram of this
strategy and identify the maximum gain, maximum
loss, and break-even point. Hint: Write down a profit
analysis matrix to help you draw the payoff lines.

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