7. (past UoL exam) The current price of shares in Eco Power is £100 per share. The following table shows prices of 1-year options on Eco Power. Eco Power September options Strike Price 90 100 110 CALL 14 6 4 PUT 3 6 13 Study carefully the option prices in the table. Can you exploit these prices to make arbitrage profits? Explain.

7. (past UoL exam) The current price of shares in Eco Power is £100 per share. The following table shows prices of 1-year options on Eco Power. Eco Power September options Strike Price 90 100 110 CALL 14 6 4 PUT 3 6 13 Study carefully the option prices in the table. Can you exploit these prices to make arbitrage profits? Explain.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Required: Refer to Figure 15.1, which lists the prices of various Microsoft options. Use the data in the figure to calculate the payoff and the profit/loss for investments in each of the following December 2019 expiration options on a single share, assuming that the stock price on the expiration date is $137. (Loss amounts should be indicated by a minus sign. Round "Profit/Loss" to 2 decimal places.) a. Call option, X = 135 b. Put option, X = 135 es c. Call option, X = 145 d. Put option, X = 145 Payoff Profit/Loss
Refer to the stock options on Microsoft in the Figure 2.10. Suppose you buy a November expiration call option on 100 shares with the excise price of $140. Required: a-1. If the stock price at option expiration is $144, will you exercise your call?a-2. What is the net profit/loss on your position? (Input the amount as a positive value.)a-3. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) b-1. Would you exercise the call if you had bought the November call with the exercise price $135?b-2. What is the net profit/loss on your position? (Input the amount as a positive value.)b-3. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)c-1. What if you had bought the November put with exercise price $140 instead? Would you exercise the put at a stock price of $140?c-2. What is the rate of return on your position? (Negative…
Required: Refer to Figure 15.1, which lists the prices of various Microsoft options. Use the data in the figure to calculate the payoff and the profit/loss for investments in each of the following November 2019 expiration options on a single share, assuming that the stock price on the expiration date is $138. (Loss amounts should be indicated by a minus sign. Round "Profit/Loss" to 2 decimal places.) ✓ Answer is complete but not entirely correct. Payoff Profit/Loss a. Call option, X = 135 $ 3.00 $ (3.78) b. Put option, X = 135 $ 0.00 $ (1.89) c. Call option, X = 140 $ 0.00 $ (1.50) X d. Put option, X = 140 $ 7.00 $ 0.35 x
Assume a stock with an option with the information as follows. • Stock purchased price was $113.• Call option on the stock was purchased at $4. • Call option has strike price at $115.• the stock price is $117on expiration date Please explain the Call Options Payoff Diagrams below, why it plot like this (please explain step by step) . Thank you for your answering
Covered Calls Please help me.
Q1. You have purchased a call option on Johnson & Johnson common stock. The option has an exercise price of $57.50 and J & J’s stock currently trades at $58.93. The option premium is $2.17 per contract. Calculate your net profit on the option if J & J’s stock price rises to $62.50 and your exercise the option. Calculate your net profit on the option if J & J’s stock price falls to $58.00 and your exercise the option. If J & J’s stock price falls to $58.00 show that it is more profitable to exercise than not exercise the option you have purchased.
Use the data in the figure 20.1 and calculate thepayoff and the profits for investments in each ofthe following January expiration options, assumingthat the stock price on the expiration date is $125.a. Call option, X=$120b. Put option, X=$120c. Call option, X=$125d. Put option, X=$125e. Call option, X=$130f. Put option, X=$130
Calculate (i) the cashflow today, (ii) the cashflow at maturity, and (iii) the net profit from your option trading (i.e., i + ii). All options are European style and cover 1,000 shares in the underlying asset. a) For a premium of $2.30, you purchase a call option with a strike price of $6. At expiry, the stock price is $7.80.
1
Please correct answer and don't use hand raiting
Suppose you wrote a European put option on RDNW with an exercise of $30 and premium of $2.7. What would be your profit (per share) if the stock price at the expiration date is $26?
Bha

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