Question

Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $28.

  

						Calls							Puts
Option and NY Close	Expiration			Strike Price		Vol.			Last				Vol.			Last
Macrosoft
		Feb		30			86			0.33				41			1.33
		Mar		30			62			0.57				23			1.74
		May		30			23			0.85				12			2.16
		Aug		30			4			1.06				4			2.20

  

a.	Suppose you buy 11 contracts of the February 30 call option. How much will you pay, ignoring commissions? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Cost?

Suppose you buy 11 contracts of the February 30 call option and Macrosoft stock is selling for $31 per share on the expiration date.

   

b-1.	How much is your options investment worth? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
b-2.	What if the terminal stock price is $30? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

b-1.Payoff

b-2.Payoff  

Suppose you buy 11 contracts of the August 30 put option.

   

c-1.	What is your maximum gain? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
c-2.	On the expiration date, Macrosoft is selling for $24 per share. How much is your options investment worth? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
c-3.	On the expiration date, Macrosoft is selling for $24 per share. What is your net gain? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

c-1.Maximum gain

c-2.Position value

c-3.Net gain

  

Suppose you sell 11 of the August 30 put contracts.

  

d-1.	What is your net gain or loss if Macrosoft is selling for $26 at expiration? (A loss amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
d-2.	What is your net gain or loss if Macrosoft is selling for $32 at expiration? (A loss amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
d-3.	What is the break-even price –– that is, the terminal stock price that results in a zero profit? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

     

	d-1. Gain/Loss d-2. Gain/Loss d-3. Break-even

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE