Bullish price spread: Short the high exercise price call and long the low exercise price call IBM Call Expiration July Strike Last 90 13.44 July 95 9.8 July 100 7.35 1 contract for each Stock price/share 80 87.5 90 92.5 96.06 100 105 107.35 110 115 120 Call premium (Long low) Call premium (Short high) Payoff (low) Payoff (high) Profit

Bullish price spread: Short the high exercise price call and long the low exercise price call IBM Call Expiration July Strike Last 90 13.44 July 95 9.8 July 100 7.35 1 contract for each Stock price/share 80 87.5 90 92.5 96.06 100 105 107.35 110 115 120 Call premium (Long low) Call premium (Short high) Payoff (low) Payoff (high) Profit

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

See similar textbooks

Similar questions

QUESTION 5 Suppose company XYZ's stock is trading at $53.86. You currently hold a put option with a strike price of $69.95 and premium on the option was $14.39. If today is the expiration date, how much did you gain or lose on the option? (Put the answer in as a negative if it's a loss.)
A short strangle was initiated with a strike price for the call at $70 and the strike price of the put at $80. The premium recieved for writing/selling the put was $12 and the premium received for writing/selling the call was $15. Within what range must the stock be at expiration to not lose money on this strangle?
M 10
1. If you had bought the January put with exercise price $105, will you exercise your put? 2. What is the profit (loss) on your position?
Underlying Microsoft (MSFT) Price: 295.71 Expiration Strike Call Put 1-Oct-2021 290 9.43 3.63 1-Oct-2021 300 3.60 7.82 1-Oct-2021 310 1.08 15.28 17-Dec-2021 290 17.25 11.72 17-Dec-2021 300 11.75 16.25 17-Dec-2021 310 7.62 22.05
ZZ Industries: Price 34.36 Calls: Strike Symbol Last Chg Bid Ask Vol 30.00 ZZBF 4.30 1.07 4.30 4.40 62 32.50 ZZBZ 1.87 1.07 1.82 1.87 236 35.00 ZZBG .01 1.05 .00 .01 3119 Puts: Strike Symbol Last Chg Bid Ask 30.00 ZZNF 32.50 ZZNZ .01 .00 .00 .01 1.02 .00 35.00 ZZNG .60 1.14 .63 Multiple Choice $3.00 Vol 0 $4.00 .01 .01 .68 2637 562 Open Int 3,429 8,168 38,017 You want the right, but not the obligation, to sell 300 shares of ZZ Industries stock at a price of $32.50 a share. How much will it cost you to establish this option position? Open Int 7,258 34,972 19,686 Help Save & Exit Su
Calls Puts Close Hendreeks Strike Price Expiration Vol. Last Vol. Last 103 100 Feb 72 5.20 50 2.40 103 100 Mar 41 8.40 29 4.90 103 100 Apr 16 103 100 Jul 8 10.68 14.30 10 6.60 2 10.10 Suppose you buy 40 July 100 put option contracts. What is your maximum gain? On the expiration date, Hendreeks is selling for $86.40 per share. How much is your options investment worth? What is your net gain? (Do not round intermediate calculations.) Maximum gain Terminal value Net gain
Close Hend reeks 103 103 103 103 Maximum gain Terminal value Net gain Calls Strike Price Expiration Volume Last 5.20 February March 72 41 8.40 April 16 July 8 100 100 100 100 10.68 14.30 Puts Volume Last 50 29 10 2 2.40 4.90 6.60 10.10 Suppose you buy 30 March 100 put option contracts. What is your maximum gain? On the expiration date, Hendreeks is selling for $84.60 per share. How much is your options investment worth? What is your net gain? Note: Do not round intermediate calculations.
F3
9
Straddle problem Given a stock with a current strike price of $25 and the following information; Write 1 ABC September 25 Calls @ 1Write 1 ABC September 25 puts @ 3 What is the total premium paid? (assume 1 contract = 100 shares) What is the maximum investor return? What is the maximum investor loss? Why do investors use straddles? If an investor buys a derivative position, are they long or short?
Digital Executive Cheese Fruit January +14 +7 February -3 +1 March +5 +4 April +7 +13 May -4 +2 June +3 +5 July -2 -3 August -8 -2 Required: a-1. Calculate the variance and standard deviation of each stock. a-2. Which stock is riskier if held on its own? b. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks. c. Is the variance more or less than halfway between the variance of the two individual stocks? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B Req C Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks. Note: Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places. Month January February March April May June July August Portfolio Return

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS