Question
In: Finance
Suppose you bought a PUT option on a share of Tesla stock (Strike Price $200, Expiration...
Suppose you bought a PUT option on a share of Tesla stock (Strike Price $200, Expiration Date 11/1/2019) today for a price of $4.99. On the expiration date, the price of a share of Tesla is $300. Answer the following questions.
1. Will you exercise the put option?
2. What is your Payoff?
3. What is your Profit/Loss?
Solutions
jeff jeffy answered 2 hours agoRelated Solutions
Given the following: Call Option: Strike Price = $60, expiration costs $6 Put Option: Strike Price...
Given the following:
Call Option: Strike Price = $60, expiration costs $6
Put Option: Strike Price = $60, expiration costs $4
In excel, show the profit from a straddle for this. What range
of stock prices would lead to a loss for this?
Including a graph would be helpful.
Suppose you short a put option with a strike price of $20 and long another put...
Suppose you short a put option with a strike price of $20 and
long another put option with a strike price of $18. Assume the
premium for the first option is $1 and the premium for the second
option is $0.5. Which of the following is correct?
You wish the stock price stays above $20.
If stock price is at $19.8, you have incurred a loss.
You only have a loss if the stock price goes below $18.
You only...
Suppose that a European put option has a strike price of $150 per share, costs $8...
Suppose that a European put option has a strike price of $150
per share, costs $8 per share, and is held until maturity.
a) Under what circumstances will the seller of the option make a
profit?
b) Under what circumstances will the buyer exercise the
option?
c) Draw a diagram (or a table) illustrating how the profit from
a short position in the
option depends on the stock price at the maturity of the
option.
Suppose that a European put option has a strike price of $150 per share, costs $8...
Suppose that a European put option has a strike price of $150
per share, costs $8 per share, and is held until maturity.
a) Under what circumstances will the seller of the option make a
profit?
b) Under what circumstances will the buyer exercise the
option?
c) Draw a diagram (or a table) illustrating how the profit from
a short position in the option depends on the stock price at the
maturity of the option.
Suppose a call option with a strike price of $43 costs $5. Suppose a put option...
Suppose a call option with a strike price of $43 costs $5.
Suppose a put option with a strike price of $43 also costs $5. You
decide to enter a strip (\/), which has a slope of negative 2 prior
to the kink point and positive 1 after the kink point. What is the
profit of the strategy if the stock price is 37 at expiration?
(required precision: 0.01 +/- 0.01)
Consider a European put option on a share of a company. The strike price is 50....
Consider a European put option on a share of a company. The
strike price is 50. The investors pays an option premium of 10. If
the payoff for the investor (not taking into account the option
premium) is 10, then what is the profit of the option writer
(taking everything into account)?
Please leave answer to 4 decimal places
Consider a European put option on a share of a company. The strike price is 50....
Consider a European put option on a share of a company. The
strike price is 50. The investors pays an option premium of 10. If
the payoff for the investor (not taking into account the option
premium) is 10, then what is the profit of the option writer
(taking everything into account)?
A European call option and put option on a stock both have a strike price of...
A European call option and put option on a stock both have a
strike price of $21 and an expiration date in 4 months. The call
sells for $2 and the put sells for $1.5. The risk-free rate is 10%
per annum for all maturities, and the current stock price is $20.
The next dividend is expected in 6 months with the value of $1 per
share.
(a) describe the meaning of “put-call parity”. [2
marks]
(b) Check whether the...
A European call option and put option on a stock both have a strike price of...
A European call option and put option on a stock both have a
strike price of $21 and an expiration date in 4 months. The call
sells for $2 and the put sells for $1.5. The risk-free rate is 10%
per annum for all maturities, and the current stock price is $20.
The next dividend is expected in 6 months with the value of $1 per
share.
(a) In your own words, describe the
meaning of “put-call parity”.
(b) Check...
A European call option and put option on a stock both have a strike price of...
A European call option and put option on a stock both have a
strike price of $25 and an expiration date in four months. Both
sell for $4. The risk-free interest rate is 6% per annum, the
current stock price is $23, and a $1 dividend is expected in one
month. Identify the arbitrage opportunity open to a
trader.
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