Question

BXP is currently trading at $91/share. You bought 6 CALL-option contracts on BXP with a strike price of $90 for $4.0 each and sold 6 CALL-option contracts on BXP with a strike price of $100 for $2.0 each.

a. What will be your total $ and % gain/loss if BXP price is $102 at the expiration date?

b. What will be your total $ and % gain/loss if BXP price is $85 at the expiration date?

c. What will be your total $ and % gain/loss if BXP price is $94 at the expiration date?

Answer 1

ans;

Assuming contract size of 100
1.
here total gain is = 6*100*(MAX(102-90,0)-4-MAX(102-100,0)+2)

                   = 4800
so here we get gain og 4800 then % gain is

     =4800/(6*100*(4-2))=400.00%

2.
here total gain is = 6*100*(MAX(85-90,0)-4-MAX(85-100,0)+2)

                            = -1200

we get negative value so here loss of 1200

then % loss is =1200/(6*100*(4-2))

                         = 100%

3.
her total gain is = 6*100*(MAX(94-90,0)-4-MAX(94-100,0)+2)

                           = 1200.00

so here is total gain of 1200
then % gain is =1200/(6*100*(4-2))]

                    = 100.00%

please give us a thumbs up