EXERCISE #1: Options basics. Figure out the payoff and the
profit per share in A-C: A. You sell a 47 put for 4. Stock ends at
$48.
Payoff=................ Profit=............................ B.
You sell a 54 put for 4. Stock ends at $47.
Payoff=................. Profit=.......................... C.
You sell a 50 put for 3, and buy a 45 put for 2. Stock ends at
$45.
Payoff=................ Profit=............................ D.
You buy a 52 put when the stock trades at 49.
Intrinsic Value= ............. Premium...
What are both the payoff and the profit or loss per share for an investor in the following twosituations?i. Jean buys the June, 2022 expiration Paypal call option for $6.40 with an exercise priceof $120, if the Paypal stock price at the expiration date is $132?ii. Joan buys a Paypal put option for $4.50 with the same expiration date and exerciseprice as Jean’s call option, and the Paypal stock price is also $132 at the expirationdate?
Payoff/profit of put/call?
Payoff diagrams recognition (plain vanilla or
strategies/combo)
Profit diagrams recognition (plain vanilla or
strategies/combo)
Put-call parity concept
Strategies: concepts. Eg. What strategy consists of what.
Relationship between option value and other factors
Jackson Corporation stock is selling for $45 per share. An
investor is considering buying a call option with an exercise price
of $50. The investor is willing to pay the premium of 25 cents per
option.
Please work in excel and show how you derived the answer.
A. Calculate the exercise value of the option?
B. Why is an investor willing to pay 50 cents an option when the
stock is going for $45?
c. Calculate the exercise value if...
Stock in Cheezy-Poofs Manufacturing is currently priced at $45
per share. A call option with a $48 strike and 90 days to maturity
is quoted at $1.50. Compare the percentage gains or losses from a
$70,000 investment in the stock versus a $70,000 investment in the
options (e.g., $70,000 worth of options) if, in 90 days, the stock
price is $40; if the stock price is $50; and if the stock price is
$60.
Jackson Corporation stock is selling for $45 per share. An
investor is considering buying a call option with an exercise price
of $50. The investor is willing to pay the premium of 55 cents per
option. Please work in excel and show how you derived the
answer.
A. Calculate the exercise value of the option?
B. Why is an investor willing to pay 50 cents an option when the
stock is going for $45?
c. Calculate the exercise value if...
At the beginning of the month, you sell short 200 shares of
Wells Fargo that are currently selling at $45 per share. One month
later you cover your short position at $52 per shares. During the
month, Wells Fargo issued $2 dividend per share. What is you return
during this month?-0.2000.200-0.156-0.1110.111
Misuraca Enterprise's current stock price is $45 per share. Call
options for this stock exist that permit the holder to purchase one
share at an exercise price of $50. These options will expire at the
end of 1 year, at which time Misuraca's stock will be selling at
one of two prices, $35 or $55. The risk-free rate is 5.5%. As an
assistant to the firm’s treasurer, you have been asked to perform
the following tasks to arrive at the...