Suppose you purchase 6 put contracts on Testaburger Co. stock. The strike price is $35, and...

Suppose you purchase 6 put contracts on Testaburger Co. stock. The strike price is $35, and the premium is $1.50. If, at expiration, the stock is selling for $31 per share, what are your put options worth? What is your net profit?

Solutions

Expert Solution

jeff jeffy answered 1 month ago

Next > < Previous

Related Solutions

You purchase 15 put option contracts on ABC stock. The strike price is $22, and the...

You purchase 15 put option contracts on ABC stock. The strike price is $22, and the premium is $0.5. The contract size is 100 shares. 1. If the stock is selling for $20 per share at expiration, what are your put options worth? 2. What is your net profit? 3. What if the stock were selling for $21? $22? need full steps, thx!!!

You are long 6 contracts of 2-yr put option on QQQ with a strike price (K)...

You are long 6 contracts of 2-yr put option on QQQ with a strike price (K) of $200. What will be your payoff at expiry if QQQ price at expiry (S_T) is $250?

Suppose that put options on a stock with strike prices $30 and $35 cost $4 and...

Suppose that put options on a stock with strike prices $30 and $35 cost $4 and $7, respectively. How can the options be used to create (a) a bull spread and (b) a bear spread? For both spreads, show the profit functions for the intervals defined by the strike prices, and their graphical representation.

Suppose that put options on a stock with strike prices $30 and $35 cost $4 and...

Suppose that put options on a stock with strike prices $30 and $35 cost $4 and $7, respectively. They both have 6-month maturity. (a) How can those two options be used to create a bear spread? (b) What is the initial investment? (c) Construct a table that shows the profits and payoffs for the bear spread when the stock price in 6 months is $28, $33 and $38, respectively. The table should look like this: Stock Price Payoff Profit $28...

You purchase 18 call option contracts with a strike price of $100 and a premium of...

You purchase 18 call option contracts with a strike price of $100 and a premium of $2.85. Assume the stock price at expiration is $112.00. a. What is your dollar profit? (Do not round intermediate calculations.) b. What is your dollar profit if the stock price is $97.95? (A negative value should be indicated by a minus sign. Do not round intermediate calculations.)

A. An investor buys for $3 a put with strike price of $35 and sells for...

A. An investor buys for $3 a put with strike price of $35 and sells for $1 a put with a strike price of $30. What is this strategy called? What are the payoffs and profits if the stock price is above $35, below $30, and between $30 and $35? B. The common stock of the P.U.T.T. Corporation has been trading in a narrow price range for the past month, and you are convinced it is going to break far...

Q3. Suppose you write 30 put option contracts with a strike of $100 and expiring in...

Q3. Suppose you write 30 put option contracts with a strike of $100 and expiring in 3 months. The put options are trading at $4.80. What is your net gain/loss if the underlying stock price at maturity is $110? What is the break-even price when your profit from this investment is zero? Q4. A strangle is created by buying a put option, and buying a call on the same stock with higher strike price and same expiration. A put with...

A call with a strike price of $60 costs $6. A put with the same strike...

A call with a strike price of $60 costs $6. A put with the same strike price and expiration date costs $4. For each of the intervals defined by the strike price, show the profit functions associated with forming a straddle (long position), and its graphical representation. For what range of stock prices would the straddle lead to a loss?

A stock currently sells for $32. A 6-month call option with a strike price of $35...

A stock currently sells for $32. A 6-month call option with a strike price of $35 has a price of $2.27. Assuming a 4% continuously compounded risk-free rate and a 6% continuous dividend yield: a)What is the price of the associated put option? b)What are the arbitrage opportunities if the price of the put option was $5? c)What if this price was $6?

A stock currently sells for $32. A 6-month call option with a strike price of $35...

A stock currently sells for $32. A 6-month call option with a strike price of $35 has a price of $2.27. The price of the put option that satisfies the put-call-parity is $5.5229.Assuming a 4% continuously compounded risk-free rate and a 6% continuous dividend yield: a) What are the arbitrage opportunities if the price of the call option in question 5 was $2? b)What if this price was $3?

Subjects