In expectation of stagnate price, you sold a at-the-money put option and at the same time...

In expectation of stagnate price, you sold a at-the-money put option and at the same time sold a atthe-money call option with common exercise prices of $15. Option premium at $3 each. Your strategy is known as a_____? Please draw out the payoff-profile of this strategy and clearly state all key info. What is the maximum $ would you make with this strategy?

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jeff jeffy answered 1 year ago

You wrote(sold short) 1 put option when the put option price was $2, the underlying stock...

You wrote(sold short) 1 put option when the put option price was $2, the underlying stock price was $50, and the delta of the put option was -0.65. To achieve delta neutrality, you shorted some shares of the underlying stock. Please fill in the blanks in the following table. Please show calculations. Week Stock price Put option price per share Delta Number of additional shares shorted Proceeds from short selling additional shares 0 50.00 2 -0.65 1 48.12 3.6 -0.80...

A put and a call option have the same maturity and strike price. If they also...

A put and a call option have the same maturity and strike price. If they also have the same price, which one is in the money? Mathematically show how you reached your conclusion.

Let X = strike price and S = share price. A put option is deep out-of-the-money...

Let X = strike price and S = share price. A put option is deep out-of-the-money if _____________ (choose the best answer from the list below to complete the sentence). a)X/S is between 1.06 and 1.15 b)X/S is between 1.01 and 1.05 c)X/S is equal to 1.00 d)X/S is between 0.95 and 0.99 e)X/S is between 0.85 and 0.94

What would happen to the premium for an at-the-money call option, an at-the-money put option, and...

What would happen to the premium for an at-the-money call option, an at-the-money put option, and an in-the-money call option on a stock if: a. the stock's price jumps 15%? b. a month passes with very little change to the stock's price c. the firm issues an earnings report with no impact on the spot price d. there is high volatility for the stock

A put option with a strike price of $65 costs $8. A put option with a...

A put option with a strike price of $65 costs $8. A put option with a strike price of $75 costs $15. 1) How can a bull spread be created? 2) With the bull spread created above, what is the profit/loss if the stock price is $70? 3) With the bull spread created above, when would the investor gain a positive profit?

A put option with a strike price of $65 costs $8. A put option with a...

A put option with a strike price of $65 costs $8. A put option with a strike price of $75 costs $15. 1) How can a bull spread be created? 2) With the bull spread created above, what is the profit/loss if the stock price is $70? 3) With the bull spread created above, when would the investor gain a positive profit?

Please prove call option and put option with the same maturity are having exactly the same...

Please prove call option and put option with the same maturity are having exactly the same option premium, if their strike prices are the same and are forward price.

Which of the following explains selling a put option? You receive money You pay money You...

Which of the following explains selling a put option? You receive money You pay money You have the obligation to sell the underlying stock Answers a and c Answers b and c

1-year put option on the same stock with an exercise price of $35 costs $2.1, the...

1-year put option on the same stock with an exercise price of $35 costs $2.1, the stock price is $33 and the interest rate on a bank deposit per annum is 10%. a) Use the put-call parity relation to calculate the price of a 1-year European call option on the same stock. b) If the market price of the call option is $4, is there an arbitrage opportunity? c) If so, define arbitrage strategy.

1. Consider an at-the-money European put option with a strike price of $30 and 6 months...

1. Consider an at-the-money European put option with a strike price of $30 and 6 months until expiration.The underlying stock does not pay dividends and has a historical volatility of 35%. The risk-free rate is 3%. a. (5 points) What is the options delta? b. (5 points) What is the value of the option? c. (5 points) If the stock price immediately changed to $24, what would be the estimated price of the option, using the delta approximation? d .(5...

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In expectation of stagnate price, you sold a at-the-money put option and at the same time...

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