Question

In: Finance

Fill in the missing information in the following table: At Expiration Long Call Strike &nbsp

Fill in the missing information in the following table:

At Expiration

Long Call Strike Value of Value of Profit Profit

or Short or Put Price Option Today Underlying (Intrinsic Value) (Loss) Asset

Long Call 100 2.50 110

Short Call 100 2.50 110

Long Put 100 2.50 95

Short Put 100 2.50 95

Long Call 120 2.50 105

Short Call 120 2.50 105

Long Put 120 2.50 130

Short Put 120 2.50 130

Expert Solution

The formulae used below are:

Intrinsic value of long call=MAX(spot expiry-strike,0)

Profit of long call=MAX(spot expiry-strike,0)-Call price

Intrinsic value of short call=-MAX(spot expiry-strike,0)

Profit of short call=-MAX(spot expiry-strike,0)+Call price

Intrinsic value of long put=MAX(strike-spot expiry,0)

Profit of long put=MAX(strike-spot expiry,0)-Put price

Intrinsic value of short put=-MAX(strike-spot expiry,0)

Profit of short put=-MAX(strike-spot expiry,0)+Put price

Long Call Strike Value of Value of Profit Profit

or Short or Put Price Option Today Underlying (Intrinsic Value) (Loss) Asset

Long Call 100 2.50 110 10 7.5

Short Call 100 2.50 110 -10 -7.5

Long Put 100 2.50 95 5 2.5

Short Put 100 2.50 95 -5 -2.5

Long Call 120 2.50 105 0 -2.5

Short Call 120 2.50 105 0 2.5

Long Put 120 2.50 130 0 -2.5

Short Put 120 2.50 130 0 -2.5

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