Question
In: Finance
The following table lists prices of Alphabet options in December 2015 when Alphabet stock was selling...
The following table lists prices of Alphabet options in December 2015 when Alphabet stock was selling for $750.
| Expiration Date | Exercise Price | Call Price | Put Price | ||||||
| January 2017 | $ | 700 | $ | 105.11 | $ | 63.54 | |||
| 750 | 81.80 | 76.50 | |||||||
| 800 | 61.10 | 106.00 | |||||||
Suppose that by January 2017, the price of Alphabet could either rise from its December 2015 level to $750 × 1.24 = $930.00 or fall to $750/1.24 = $604.84.
a. What would be your percentage return on a January expiration call option with an exercise price of $750 if the stock price rose? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)
|
b. What would be your percentage return if the stock price fell?
|
c. Which is riskier: the stock or the option?
Solutions
jeff jeffy answered 7 months agoRelated Solutions
The following table lists prices of Alphabet options in December 2015 when Alphabet stock was selling...
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Expiration Date
Exercise Price
Call Price
Put Price
March 2016
$
440
$
43.66
$
15.10
470
26.75
27.90
475
14.70
46.40
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Price
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11.04
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PUT PRICE
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77.716
43.015
1000
64.595
X
1025
53.115
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please write the solving process
without using excel
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1.6
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