Question
In: Finance
You own a put option on Ford stock with a strike price of $99. When you...
You own a put option on Ford stock with a strike price of
$99.
When you bought the put, its cost to you was
$33.
The option will expire in exactly six months' time.
a. If the stock is trading at
$22
in six months, what will be the payoff of the put? What will be the profit of the put?
b. If the stock is trading at
$2020
in six months, what will be the payoff of the put? What will be the profit of the put?
c. Draw a payoff diagram showing the value of the put at expiration as a function of the stock price at expiration.
d. Redo c, but instead of showing payoffs, show profits.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
ou own a call option on Intuit stock with a strike price of $4040. When you...
ou own a call option on Intuit stock with a strike price of
$4040.
When you purchased the option, it cost
$66.
The option will expire in exactly three months' time.
a. If the stock is trading at
$5555
in three months, what will be the payoff of the call? What
will be the profit of the call?
b. If the stock is trading at
$3434
in three months, what will be the payoff of the call? What
will be...
You own one call option and one put option on Shell, both with a strike price...
You own one call option and one put option on Shell, both with a
strike price of 80. The interest rate is 5% and the time to
expiration is nine months. The standard deviation of Shell is 25
percent. Graph on the same graph the value of the call and the put
as the price of Shell goes from 70 to 130. (So that is two lines on
the same graph.) Note:at least 50 data points on the graphs
A European call option and put option on a stock both have a strike price of...
A European call option and put option on a stock both have a
strike price of $21 and an expiration date in 4 months. The call
sells for $2 and the put sells for $1.5. The risk-free rate is 10%
per annum for all maturities, and the current stock price is $20.
The next dividend is expected in 6 months with the value of $1 per
share.
(a) describe the meaning of “put-call parity”. [2
marks]
(b) Check whether the...
A European call option and put option on a stock both have a strike price of...
A European call option and put option on a stock both have a
strike price of $21 and an expiration date in 4 months. The call
sells for $2 and the put sells for $1.5. The risk-free rate is 10%
per annum for all maturities, and the current stock price is $20.
The next dividend is expected in 6 months with the value of $1 per
share.
(a) In your own words, describe the
meaning of “put-call parity”.
(b) Check...
A European call option and put option on a stock both have a strike price of...
A European call option and put option on a stock both have a
strike price of $25 and an expiration date in four months. Both
sell for $4. The risk-free interest rate is 6% per annum, the
current stock price is $23, and a $1 dividend is expected in one
month. Identify the arbitrage opportunity open to a
trader.
1.The price of a three-month European put option on a stock with a strike price of...
1.The price of a three-month European put option on a stock with
a strike price of $60 is $5. There is a $1.0067 dividend expected
in one month. The current stock price is $58 and the continuously
compounded risk-free rate (all maturities) is 8%. What is the price
of a three-month European call option on the same stock with a
strike price of $60?
Select one:
a. $5.19
b. $1.81
c. $2.79
d. $3.19
2.For the above question, if the...
You purchase 15 put option contracts on ABC stock. The strike price is $22, and the...
You purchase 15 put option contracts on ABC stock. The strike
price is $22, and the premium is $0.5. The contract size is 100
shares.
1. If the stock is selling for $20 per share at expiration, what
are your put options worth?
2. What is your net profit?
3. What if the stock were selling for $21? $22?
need full steps, thx!!!
A put option on an IBM stock has a strike price of $125. The holder of...
A put option on an IBM stock has a strike price of $125. The
holder of this put option exercises the option today when the price
of IBM stock is $122. This means that the holder of the put
option_____ sells an IBM share today at the price of $122 sells an
IBM share today at the price of $125 buys an IBM share at the price
of $125 sells the option contract today for a price of $125
A put option on a stock expires in 7 months with a strike price of 150....
A put option on a stock expires in 7 months with a strike price
of 150. The interest rate is 5 percent and the standard deviation
of the stock is 25 percent. Graph the value of this put option as
the price of the stock goes from 130 to 170.
A call option on a stock with a strike price of $60 costs $8. A put...
A call option on a stock with a strike price of $60 costs $8. A
put option on the same stock with the same strike price costs $6.
They both expire in 1 year.
(a) How can these two options be used to create a straddle?
(b) What is the initial investment?
(c) Construct a table that shows the payoffs and profits for the
straddle when the stock price in 3 months is $50, and $72,
respectively. The table should...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Compare the MOSFET, JFET , and BJT and identify the reasons these devices behave differently. What...
- How would you use SAS Enterprise Miner to create a neural network model of your example?
- Explain the use of neural networking modeling in predictive analytics.
- Current Market Mix of Netflix, as detail as possible, please.
- This is all one question, thank you so much in advance! You must evaluate a proposal...
- X Company is considering the purchase of a new processor that costs $200,000. Shipping and setup...
- There are a large number of tasks involved in information technology and programming, and many of...
ADVERTISEMENT