Question

In: Finance

Use the option quote information shown here to answer the questions that follow. The stock is...

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

Solutions

Expert Solution

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