Classify the following options as in-the-money (ITM), at-the-money (ATM) or out-the-money (OTM): a) Call option, strike...

Classify the following options as in-the-money (ITM), at-the-money (ATM) or out-the-money (OTM): a) Call option, strike price $50, current price of the underlying asset $55. b) Put option, strike price $55, current price of the underlying asset $50. c) Call option, strike price $70, intrinsic value $5 d) Put option, strike price $40, premium $3, time value $3.

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

An investor longs 1 call options with strike at K1, shorts 2 call options with strike...

An investor longs 1 call options with strike at K1, shorts 2 call options with strike at K2, and longs a call options with strike at K3. Given K1<K2<K3, please draw the payoff patter of these positions

Graph the profit/loss for the following options positions. Long at-the-money call with strike 40 and premium...

Graph the profit/loss for the following options positions. Long at-the-money call with strike 40 and premium 2; Short at-the-money put with strike 40 and premium 2 Combination of the long call and short put, both with strike=40 and premium=2 Long straddle: buy call and put both with strike 40 and premium 3 Short straddle: sell call and put, both with strike 40 and premium 3

OPTIONS. You purchase a call option on July cocoa with a strike price of 1600 per...

OPTIONS. You purchase a call option on July cocoa with a strike price of 1600 per metric ton. The premium on the option is $30 per metric ton. The contract size for cocoa is 10 metric tons. a) Is this option in the money, out of the money or at the money? Explain. b) If you exercise your option when cocoa is trading at $1750 per metric ton, what is your profit or loss on the transaction? c) The July...

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.

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...

Given the following: Call Option: Strike Price = $60, expiration costs $6 Put Option: Strike Price...

Given the following: Call Option: Strike Price = $60, expiration costs $6 Put Option: Strike Price = $60, expiration costs $4 In excel, show the profit from a straddle for this. What range of stock prices would lead to a loss for this? Including a graph would be helpful.

Is a put option on the ¥ with a strike price in €/¥ also a call...

Is a put option on the ¥ with a strike price in €/¥ also a call option on the € with a strike price in ¥/€? Explain.

Please show work. The following are three-month call option prices: the call at strike 100 is...

Please show work. The following are three-month call option prices: the call at strike 100 is trading at $ 5 and the call at strike 102 is trading at $ 2.5. The rate of interest (continuously compounded) is 3%. 1) Is there an arbitrage strategy is this market and how would you implement it? 2) Draw a cash flow table showing the outcome of your strategy at maturity for every possible stock price level.

If we write a European call option on €, the strike price is $1.2141/€. The option...

If we write a European call option on €, the strike price is $1.2141/€. The option premium is $0.0500/€. On the expiration date, the market spot price is $1.3262/€. Then__ A. The option is exercised, and we lose $0.0621/€. B. The option is not exercised, and we profit $0.0500/€ C. The option is exercised, and we lose $1.2762/€. D. The option is not exercised, and we profit $0.1121/€

A call option with a strike price of $50 costs $2. A put option with a...

A call option with a strike price of $50 costs $2. A put option with a strike price of $45 costs $3. Explain how a strangle can be created from these two options. Construct a table that shows the payoff and profits of the strangle.

Subjects