This post is currently awaiting moderation.
Question
In: Accounting
A put option to sell 62,500 Euros in three months for $0.9200/€ (strike price) has a premium of 1.52 cents
A put option to sell 62,500 Euros in three months for $0.9200/€ (strike price) has a premium of 1.52 cents per Euro. If the spot rate on the expiration date of the option is $0.9000/€, what is the overall profit/loss of the put writer?
• zero
• $300
• $1250
• $950
Solutions
Expert Solution
The right option is the second option "-$300".
Explanation:
Option premium = 62500*0.0152$
= 950 (gain)
Loss on contract = 62500(0.92 - 0.90)
= 62500*0.02
= -1250(loss)
950 - 1250 = -$300
The right option is "-$300".
Hence, the right option is "-$300".
The right option is "-$300".
Junaid answered 2 years agoRelated Solutions
1a) Suppose a put option with a strike price of $65 has a premium of $11,...
1a)
Suppose a put option with a strike price of $65 has a premium of
$11, while another put on the same underlying stock has a strike
price of $70 and a premium of $9. Both options expire at the same
time. In this situation, an arbitrageur would...
Answers:
a.
do nothing because arbitrage is not possible.
b.
buy both put options.
c.
buy the 70-strike put and sell the 65-strike put.
d.
buy the 65-strike put and sell the...
An American put option to sell a Swiss franc for dollars has a strike price of...
An American put option to sell a Swiss franc for dollars has a
strike price of $0.75 and a time to maturity of one year. The
volatility of the Swiss franc is 20%, the dollar interest rate is
4%, the Swiss franc interest rate is 2%, and the current exchange
rate is 0.78. Use a three-time-step tree to value the option.
Please fill in the value for the blank cells in the tree
diagram below. Yellow (top cells) for stock...
A put option on a stock expires in 7 months with a strike price of 150....
A put option on a stock expires in 7 months with a strike price
of 150. The interest rate is 5 percent and the standard deviation
of the stock is 25 percent. Graph the value of this put option as
the price of the stock goes from 130 to 170.
1.The price of a three-month European put option on a stock with a strike price of...
1.The price of a three-month European put option on a stock with
a strike price of $60 is $5. There is a $1.0067 dividend expected
in one month. The current stock price is $58 and the continuously
compounded risk-free rate (all maturities) is 8%. What is the price
of a three-month European call option on the same stock with a
strike price of $60?
Select one:
a. $5.19
b. $1.81
c. $2.79
d. $3.19
2.For the above question, if the...
A put option with a strike price of $65 costs $8. A put option with a...
A put option with a strike price of $65 costs $8. A put option
with a strike price of $75 costs $15. 1) How can a bull spread be
created? 2) With the bull spread created above, what is the
profit/loss if the stock price is $70? 3) With the bull spread
created above, when would the investor gain a positive profit?
A put option with a strike price of $65 costs $8. A put option with a...
A put option with a strike price of $65 costs $8. A put option
with a strike price of $75 costs $15.
1) How can a bull spread be created?
2) With the bull spread created above, what is the profit/loss
if the stock price is $70?
3) With the bull spread created above, when would the investor
gain a positive profit?
The price of a European put that expires in six months and has a strike price...
The price of a European put that expires in six months and has a
strike price of $100 is $3.59. The underlying stock price is $102,
and a dividend of $1.50 is expected in four months. The term
structure is flat, with all risk-free interest rates being 8%
(cont. comp.).
What is the price of a European call option on the same stock
that expires in six months and has a strike price of $100?
[1 marks]
Explain in detail...
1. Consider an at-the-money European put option with a strike price of $30 and 6 months...
1. Consider an at-the-money European put option with a strike
price of $30 and 6 months until
expiration.The underlying stock does not pay dividends and has a
historical volatility of 35%. The risk-free rate is 3%.
a. (5 points) What is the options delta?
b. (5 points) What is the value of the option?
c. (5 points) If the stock price immediately changed to $24,
what would be the estimated price of the option, using the delta
approximation?
d .(5...
1. Bluefish has a put option that trades with a strike price of $74. The put...
1. Bluefish has a put option that trades with a strike price of
$74. The put option premium is
$12. Determine the profit/loss on WRITING one
Bluefish put option if at the option's expiration the stock price
is $50.
2. Kingfish has call options trading with a strike price of
$77 and a premium of $10.
Determine the profit/loss to the buyer of the call option if at the
time of expiration the stock price is
$63.
Graph the pay-off and profit from writting a European put option with option price (premium)=$10, strike...
Graph the pay-off and profit from writting a European put option
with option price (premium)=$10, strike price=$50. Also calculate
the intrinsic value of this option if the stock price is $45
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- A neurologist needs to counsel a stroke victim and her husband about possible outcomes, treatment options,...
- Case Study: Personal Beliefs in the Workplace Don Shakow was a prominent professional who worked in...
- 1: Competency framework usage is the modern best practice in management. What is meant by competency...
- A 19.34 g mixture of sugar (C12H22O11) and table salt (NaCl) is dissolved in 231 g...
- Young and Company claims that its pressurized diving bell will, on average, maintain its integrity to...
- 1) Alternative compiled code sequence using instructions in classes A, B, C. What is the average...
- An asset is purchased on January 1 for $48,700. It is expected to have a useful...
ADVERTISEMENT