In: Finance

- An investor buys 100 shares of a stock, shorts 50 call options on the stock with strike price of $80 and buys 50 put options on the stock with strike price of $40. All options are one-year European options. Draw a diagram illustrating the value of the investor’s portfolio as a function of the stock price after one year.

Short Call payoff = -max(St - X, 0) * 50

Long Put payoff = max(X - St, 0) * 50

Screenshot with formulas

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An investor buys 100 shares of a stock, shorts 60 call options
on the stock with strike price of $20 and buys 60 put options on
the stock with strike price of $10. All options are one-year
European options. Draw a diagram illustrating the value of the
investor’s portfolio as a function of the stock price after one
year.

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

An investor shorts 100 shares of a stock at $52 per share with
initial margin of 50% and no interest. The maintenance margin is
30%.
Suppose the closing prices for the stock over the next three
days is $56, $60 and $58. What are the values for margin and equity
in the investor’s account at the end of day three?

Mr. Suphi buys 100 shares of ABC stock on margin. The share
price is $50 and the initial margin is 50%. What is the maintenance
margin on the account if the margin call is triggered at a share
price of $35? Ignore the interest on the loan.
b) Mr. Suphi buys 200 shares of EFG stock on margin. The share
price is $60 and the initial margin is 50%. What is Mr. Suphi’s
rate of return on equity if he...

An investor buys a European call on a share for $5. The current
stock price is $102 and the strike price is $100. (a) Under what
circumstances will the investor make a profit (have positive
profit) on the expiration date? (b) Under what circumstances will
the option be exercised on the expiration date? (c) Please draw a
diagram showing how the investor’s profit depends on the stock
price on the expiration date. To put it another, draw a diagram
showing...

Investor has zero basis stock with a FMV of $50 million. The
investor buys a put with a strike price of $47,500,000. The
taxpayer writes a call with a strike price of $60 million. The
options expire in 5 years. The investor paid $3 million for the put
and received $3 million for the call. The taxpayer is an
individual. LTCG is 20% and STCG is 39.6%. How should they close
the transaction based upon the following stock values 5...

Investor buys 200 shares of stock at $27.25 per share. Investor
sells the stock after one year. 1. What is the dollar amount of
gain and the percent of return if the stock is sold for $32.60 per
share? How much does the yield percentage increase to if the stock
received a per share dividend of $1.15 during the year? 2. What is
the dollar amount of loss and percentage of return if the stock
received a per share dividend...

An investor buys 50 shares of BOA at $22.6 per share at the
beginning of 2017, buys another 80 shares at $29.75 per share at
the beginning of 2018, sells 30 shares at $24.08 per share at the
beginning of 2019, and sells all 100 remaining shares at $35.35 per
share at the beginning of 2020. BOA pays $0.39 per share of
dividends at the end of 2017, pays $0.54 per share of dividends at
the end of 2018, and...

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?

Molly shorts 100 shares of a non-dividend-paying stock at the
initial stock price of $60 per share. She invests the proceeds at
the continuously compounded risk-free interest rate of 0.05 in a
savings account. She does not make any subsequent withdrawals from
or deposits to this account until the short sale is closed. When
Molly closes the sort sale, six months later, the stock price is
$55. Does she have enough money in the savings account to be able
to...

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