čautiously bullish on the common stock of the Wildwood Corporation over the next several month: The current price of the stock is $64 per share. You want to establish a bullish money spread to help limit t cost of your option position. You find the following option quotes: Wildwoood Corp Underlying Stock price: $64.00 Expiration Strike Call Put June 59.00 9.90 2.70 June 64.00 5.20 4.40 June 69.00 2.70 8.90 Suppose you establish a bullish money spread with the puts. In June the stock's price turns out to be $66. Ignoring commissions, the net profit on your position is

čautiously bullish on the common stock of the Wildwood Corporation over the next several month: The current price of the stock is $64 per share. You want to establish a bullish money spread to help limit t cost of your option position. You find the following option quotes: Wildwoood Corp Underlying Stock price: $64.00 Expiration Strike Call Put June 59.00 9.90 2.70 June 64.00 5.20 4.40 June 69.00 2.70 8.90 Suppose you establish a bullish money spread with the puts. In June the stock's price turns out to be $66. Ignoring commissions, the net profit on your position is

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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Use the random walk model to forecast the closing price of this stock on the next trading day. Round your answer to the nearest cent, if necessary. $____ You can be about 95% certain that the forecast made in part a will be off by no more than how many dollars? Round your answers to the nearest cent, if necessary. Forecast Lower limit $ Upper limit $ Date Adjusted Close 4-Jan-18 100.47 5-Jan-18 100.70 8-Jan-18 99.78 9-Jan-18 100.14 10-Jan-18 100.84 11-Jan-18 100.35 12-Jan-18 100.59 16-Jan-18 99.97 17-Jan-18 100.38 18-Jan-18 99.49 19-Jan-18 97.66 22-Jan-18 97.95 23-Jan-18 97.61 24-Jan-18 98.93 25-Jan-18 99.32 26-Jan-18 99.26 29-Jan-18 99.04 30-Jan-18 98.34 31-Jan-18 99.03 1-Feb-18 99.63 2-Feb-18 96.32 5-Feb-18 91.67 6-Feb-18 93.83 7-Feb-18 93.26 8-Feb-18 88.01 9-Feb-18 91.38 12-Feb-18 94.35 13-Feb-18 94.21 14-Feb-18 95.87 15-Feb-18 96.20 16-Feb-18 96.43 20-Feb-18 96.83 21-Feb-18 97.14 22-Feb-18…
Basic Option Strategies Profit Computation Assume the below prices for calls and puts: Call Put Strike Jul Aug Oct Jul Aug Oct 165 2.7 5.25 8.1 2.4 4.75 6.75 170 0.8 3.25 6 5.75 7.5 1. Buy one August 170 call contract. Hold it until expiration. lIdentify the breakeven stock price at expiration. What is the profit/loss if ST=190? What is the maximum profit? 2. Buy one October 165 put contract. Hold it until the options expire. Identify the breakeven stock price at expiration. What is the Maximum possible loss from the transaction? What is the profit/loss if ST=185
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?
On July 1, an investor holds 50000 shares of a certain stock. The market price is $50 per share. The investor is interested in hedging against movements in the market over the next month and decides to use the September Mini S&P 500 futures contract. The index is currently 1500 and one contract is for delivery of $50 times the index. The beta of the stock is 1.5. What strategy should the investor follow? Under what circumstances will it be profitable?
Intro A non dividend-paying stock currently trades at $80. You short sell one share of stock, buy a call option and write a put option, both with a strike price of $51. Your immediate cash inflow is $47.84. Both options expire in one year. Part 1 What is the risk-free rate? 3+ decimals
Awesome Company's stock is currently trading at 50 per share and the risk free rate is currently 6% per year. The price of a put option on Awesome stock with a strike price of 30 and 6 months to maturity is currently 1. Determine the price of a call option with the same strike price and maturity as the put option. No dividends will be paid during the remaining lifetime of the option. A. 20.96 B. 21.86 C. 22.70 D. 51.00
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?
Topic: Option Pricing When computing, please do not round off. Only final answers must be rounded off to two decimal places 1. The Finance Department of ABC Corporation will have P1,500,000 in excess cash by the end of the month. It will be investing the excess cash in shares by the end of the month. The department wants to already reserve X Corp. shares as the investment. A standardized option has a contract size of 1,000 X Corp. shares and a strike price of P480 per share. Assuming that the Finance Department has acquired options that is within their budget and that the current market value of an X Corp. share is P500. The option contracts would have a total value of how much as of the exercise date?
Use the Black-Scholes formula for the following stock: Time to expiration 6 months Standard deviation Exercise price Stock price 41% per year $42 $41 Annual interest rate 7% Dividend Calculate the value of a call option. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Value of a call option

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