Suppose you purchase one WM May strike=102 call contract at $5
and write one WM May...
Suppose you purchase one WM May strike=102 call contract at $5
and write one WM May strike=107 call at $2. If the price of WM
stock is $105 at expiration, your profit would be _____.
A.
$4.
B.
$400.
C.
zero.
D.
$2.
Solutions
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You wish to write one European Call contract on Zoom (ZM) with a
strike price of $160. Zoom's current price is $158.01, has a u of
1.25, and d of 0.79. The risk free rate is 1% per period. Use a two
period binomial model. How many shares of Zoom do you need to
purchase to hedge your price risk when you write the call? Note:
Answer in number of shares, report up to two decimal places.
You wish to write one European Call contract on Zoom (ZM) with a
strike price of $180. Zoom's current price is $158.01, has a u of
1.25, and d of 0.79. The risk free rate is 1% per period. Use a two
period binomial model. How many shares of Zoom do you need to
purchase to hedge your price risk when you write the call?
Suppose you buy one SPX call option with a strike of 2135 and
write one SPX call option with a strike of 2195. What are the
payoffs at maturity to this position for S&P 500 Index levels
of 2050, 2100, 2150, 2200, and 2250? (A negative value
should be indicated by a minus sign. Leave no cells blank - be
certain to enter "0" wherever required.)
Index
level Long
call payoff Short call
payoff
Total payoff
2050
2100
2150
2200 ...
Suppose you buy one SPX call option with a strike of 2140 and
write one SPX call option with a strike of 2185. What are the
payoffs at maturity to this position for S&P 500 Index levels
of 2050, 2100, 2150, 2200, and 2250? (A negative value
should be indicated by a minus sign. Leave no cells blank - be
certain to enter "0" wherever required.)
Index level
Long call payoff
Short call payoff
Total payoff
2050
0
2100
0...
You purchase one (1) call option with strike price 50 for $ 9
and write three (3) call options with strike 60 for $ 3. 4) Assume
that you may purchase calls with strike price 70 for $ 1. How many
options would you trade to prevent unbounded losses at maturity?
What would be the maximum extent of your losses after the purchase?
please show work
Suppose you purchased two call option contracts (100 shares per
contract) with $15 strike price at a quoted price of $0.08
premium/share. What is your total profit on this investment if the
price is $14.80 on the option expiration date?
You buy one call and one put with a strike price of $60 for
both. The call premium is $5 and the put premium is $6.
What is the maximum loss from this strategy? [Using positive number
for profit, and negative number for loss]
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)
Suppose you do a one-year straddle strategy using a Call and a
Put. The strike price is $100. The underlying is the stock of
company ABC. Assume the prices the stock can take next year are
either $80 or $150. Both states of nature can reveal with 50%
probability.
(a) What are the payoff you receive in the two possible scenarios
stated before? Explain what is the option you exercise in every
case. (b) What is the expected payoff if...
You buy a share of stock, write a one-year call option with
strike X, and buy a one-year put option with same strike
X. You know that stock shares are currently traded at the
same price as the strike price of the options, i.e. options are
at the money and S=X. Your net outlay to establish
the entire portfolio is $30. Risk-free interest rate is 3%
-What must the strike price X be? The stock pays no
dividends.
- Find...