Suppose you purchased two call option contracts (100 shares per contract) with $15 strike price at...

Suppose you purchased two call option contracts (100 shares per contract) with $15 strike price at a quoted price of $0.08 premium/share. What is your total profit on this investment if the price is $14.80 on the option expiration date?

Expert Solution

Total Profit=Number of shares*[price of share-Strike price-premium]

=200*[14.8-15-0.08]

=200*-0.28

=-$56.0

The Loss=-$56.0

jeff jeffy answered 2 years ago

You purchase 18 call option contracts with a strike price of $100 and a premium of...

You purchase 18 call option contracts with a strike price of $100 and a premium of $2.85. Assume the stock price at expiration is $112.00. a. What is your dollar profit? (Do not round intermediate calculations.) b. What is your dollar profit if the stock price is $97.95? (A negative value should be indicated by a minus sign. Do not round intermediate calculations.)

Suppose that you purchased a call option with a strike price of $30 and paid a...

Suppose that you purchased a call option with a strike price of $30 and paid a premium of $6. 2a) What is your payoff if the price of the stock at expiration is $10? -$6 -$20 $0 None of the above 2b) What is your profit if the price of the stock at expiration is $10? -$6 -$20 $0 None of the above 2c) What is your payoff if the price of the stock at expiration is $70? $0 $34...

Suppose the price of Apple’s common shares is $180/share. The call option contract (involves 100 shares)...

Suppose the price of Apple’s common shares is $180/share. The call option contract (involves 100 shares) on Apple, with a strike price of $195/share is $10/contract. With the $180 you have, you are looking at two choices: A: Buy one share of Apple’s common stock B: Buy 18 call option contracts (1) What are the rates of return on A and B if the share price has dropped to $170/share? (2) What are the rates of return on A and...

The price of a call option with a strike of $100 is $10. The price of...

The price of a call option with a strike of $100 is $10. The price of a put option with a strike of $100 is $5. Interest rates are 0 and the current price of the underlying is $100. Can you make an arbitrage profit? If so how? Describe the trade and your pay offs in detail. Part 2: The price of a call option with a strike of $100 is $10. The price of a put option with a...

You purchase 17 call option contracts with a strike price of $95 and a premium of...

You purchase 17 call option contracts with a strike price of $95 and a premium of $3.75. Assume the stock price at expiration is $102.46. a. What is your dollar profit? (Do not round intermediate calculations.) b. What is your dollar profit if the stock price is $88.41?

A call option with strike price of $100 sells for $3 whereas a call option with...

A call option with strike price of $100 sells for $3 whereas a call option with strike price of $106 sells for $1. A ratio spread is a portfolio with the following characteristics: long on one call with Strike K1, shirt on 2 calls with Strike K2 (where K2>K1), Thsm, you create a ratio spread by buying one call option with the strike price of $100 and writing two call options with the strike price of $106. 1) perform a...

Consider a 1-year European call option on 100 shares of SPY with a strike price of...

Consider a 1-year European call option on 100 shares of SPY with a strike price of $290 per share. The price today of one share of SPY is $285. Assume that the annual riskless rate of interest is 3%, and that the annual dividend yield on SPY is 1%. Both rates are continuously compounded. Finally, SPY annual price volatility is 25%. In answering the questions below use a binomial tree with two steps. a) Compute u, d, as well as...

You purchased a call option for an Apple stock with the strike price of $110. The...

You purchased a call option for an Apple stock with the strike price of $110. The option premium was $1. You held the option until maturity, when the price for each share of Apple was $111. Your payoff at maturity was_____. -$2. $-1 $1 $0

Consider an exchange-traded call option contract to buy 500 shares with a strike price of $50...

Consider an exchange-traded call option contract to buy 500 shares with a strike price of $50 and maturity in four months. Explain how the terms of the option contract change when there is A 10% stock dividend A 10% cash dividend A 5-for-1 stock split

Given the following: Call Option: strike price = $100, costs $4 Put Option: strike price =...

Given the following: Call Option: strike price = $100, costs $4 Put Option: strike price = $90, costs $6 How can a strangle be created from these 2 options? What are the profit patterns from this? Show using excel.

Question