Calculate the rate of return to an investor who buys one call option contract on common...

Calculate the rate of return to an investor who buys one call option contract on common stock of XYZ with exercise price of $150 and maturity of six months for $10.20 per option if an actual market price of XYZ in 6 months is $160. Input your answer in %

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Suppose a novice investor buys a call option on 45,000 barrels of oil with an exercise...

Suppose a novice investor buys a call option on 45,000 barrels of oil with an exercise price of $45 per barrel and simultaneously buys a put option on 45,000 barrels of oil with the same exercise price of $45 per barrel. Her net payoff per barrel on these option contracts is ________ if the market price per barrel is $43 and ________ if the price per barrel is $47. A) −$2; $2 B) −$2; $0 C) $0; $2 D) $2;...

An investor buys a stock for $40 per share and simultaneously sells a call option on...

An investor buys a stock for $40 per share and simultaneously sells a call option on the stock with an exercise price of $42 for a premium of $3 per share. Ignoring the dividends and transaction costs, what is the maximum profit the writer of this covered call can earn if the position is held to expiration?

Calculate the call option value at the end of one period for a European call option...

Calculate the call option value at the end of one period for a European call option with the following terms: The current price of the underlying asset = $80. The strike price = $75 The one period, risk-free rate = 10% The price of the asset can go up or down 10% at the end of one period. What is the fundamental or intrinsic value? What is the time premium?

6. [Call option value] A one-year call option contract on SUNNY Co. stock sells for $845....

6. [Call option value] A one-year call option contract on SUNNY Co. stock sells for $845. In one year, the stock will be worth $64 or $81 per share. The exercise price on the call option is $70. What is the current value of the stock if the risk-free rate is 3%? (Note that one contract involves 100 shares of stock)

Jason is an investor who owns 1 share of XYZ and a sold a call option...

Jason is an investor who owns 1 share of XYZ and a sold a call option on 1 share of XYZ. The exercise price of the put option is $100 and XYZ currently trades at $99. The option premium was $3. If the price of XYZ at expiration is $50, the payoff of Jason’s position is: -$3 $0 $100 $50 $99

Suppose that an investor is analysing one European call option on an underlying stock with the...

Suppose that an investor is analysing one European call option on an underlying stock with the following characteristics: Option price is $5, the current stock price is $95, the strike price = $100, and the expiry date of the option is in 2 months. Which of the following statements is incorrect? Select one: a. The break-even price for taking a long position in this call option is $100. b. Buying the call option will give the investor some advantages over...

Recall that to create a ‘butterfly spread’, an investor buys one unit of an in-themoney call...

Recall that to create a ‘butterfly spread’, an investor buys one unit of an in-themoney call option, buys one unit of an out-of-the money call option, and sells two units of an at-the-money call option. Three European call options with exercise prices of 45, 50, and 55 are currently trading in the market. These options have the same expiration date and are on the same underlying stock. The stock is currently trading at a price of 50. i. Graph the...

In 20X1, an investor, who has not elected the fair value option, buys shares of Company...

In 20X1, an investor, who has not elected the fair value option, buys shares of Company A for $7,500 and shares of Company B for $12,437. By the end of 20X1, each of the investments has increased in value by $2,500. During 20X2, the shares of Company A are sold for $10,945. The investor then buys shares of Company C for $15,923. At the end of 20X2, the shares of Company B are worth $12,962 whereas the shares of Company...

An investor buys a butterfly spread on COPCO stock by buying one put option with an...

An investor buys a butterfly spread on COPCO stock by buying one put option with an exercise price of $50 for $1, buying one put option with an exercise price of $60 for $7 and selling two put options with an exercise price of $55 for $3 each. (above relates to the 3 questions below) (Please show workings) 1. If COPCO’s expiration date stock price is $48, the investor’s profit is: (a) $5 (b) -$2 (c) $1 (d) -$7. 2....

Consider the following option contract on the Euro: It is a call option for 125,000 euros,...

Consider the following option contract on the Euro: It is a call option for 125,000 euros, but here the settlement prices are in terms of Swiss franc per one euro (i.e., if exercised, €125,000 will be delivered in exchange for the appropriate number of francs) The strike price is 1.07 franc per euro, and the premium is 0.0060 franc per euro. Suppose a trader writes one of these call option contracts. What would be the trader’s profit or loss if...

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