Liz buys one share of Koca-Loka long for $10.40 and at the same time she buys a call on Koca-Loka that has an exercise price of $11.40 and a premium of $1.75. What is the combined profit orloss on the covered call if at the time of expiration Koca-Loka is trading at $8,70 per share? Assume that she gets out of her long position at the same time her option expiresPlace your answer with dollars and cents without a dollar sign. Enter negative answers with a "minus sign. For example, if your answer is negative two dollars and seventy five cents, then enter-2.75

Common stock is the security that offers an equity stake in the underlying company which allows the…

Answered: Liz buys one share of Koca-Loka long…

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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Similar questions

Emma purchased 10 call option contracts on Vergara stock with a strike price of $20 when the option was quoted at $0.78. The option expires today when the value of Vergara stock is $19.45. Ignoring trading costs and taxes, what is the net profit on this investment? A) $0 B) -780 C) 2000 D) -78 E) 78
XYZ purchased a call option 3 months ago for $300 ($3 per share). It gives XYZ the right to buy 100 shares in Morley Tobacco for $20 per share. The call option expires today. What is the lowest price that XYZ should exercise at and what is that lowest price at which XYZ would realize a profit?
John Love sold a put option on Canadian dellari for S0.02 per unit The strike price was S063 and the spot rate at the tmie the option wai esercised was S0 68 Assome Jotn immediately sold the Canadian dollarn receved wben the option was exercised Alio assome that there are 203.394 unats ina Canadian dellar option. What wai Joba's net profit or los on the pot option? (dft in a losA put a negative aign in front of your answer. Roond your answer to tro decimal places)
Dumo is a trader at ZNF Equity traders and has just identified a stock, UFSI Limited, which is currently trading at R25 per share. Dumo decides to take a long position in at-the money put option and simultaneously buys one share of UFSI stock. The put option expires in 3 months’ time and costs R2.5 per share. Assume a contract consists of one put option. Required: Identify the strategy employed by Dumo above.Tabulate the Profit to the strategy at expiration for the following Exercise price R30; Stock price 20. Exercise price R30; Stock price 35.
Miss Good wants to buy BAD stock, which is selling for $5 per share. She can buy on margin. The initial margin requirement is 40%, and the maintenance margin is 30%. If the price decreases to $3.5, will Miss Good receive a margin call? If she does receive a margin call, but she does nothing (because she is traveling to the Moon). Then how many shares should the broker sell to keep the margin above the maintenance margin?
You purchase one Virgin Galactic March 120 put contract (equalling 1000 shares) for a put premium of $10. You hold the option until the expiration date, when Virgin Galactic stock sells for $110 per share. a) How much is the realized profit/loss on the transaction? b) What is the maximum profit that you can realize on this position? Explain your answer! c) What is biggest loss that you can suffer on this position? Explain your answer!d) What is the realized profit/loss of your counterparty (the buyer of this call option)? Explain your answer! Provide a long and detailed answer please <3
Paul sells a stock short for $50.76 per share and buys it back 1 year later for $54.99 after he covers a $2.81 per share dividend. What is Paul’s total return on this investment? (Round answer to 2 decimal places (e.g., 36.45). Use a negative sign for a negative return.)
Mary decides to short sell 80 shares of Company Y, currently trading at $45 per share. She incurs a transaction fee of $1 per share for selling and will incur the same fee when she buys back the shares. Calculate the stock price at which Mary would break even.
Ryan Neal bought 1,400 shares of Ford at $15.82 per share. Assume a commission of 3% of the purchase price. Ryan sells the stock for $20.13 with the same 3% commission rate. What is the gain or loss for Ryan? (Input the amount as a positive value. Round your answer to the nearest cent.)
Buying a Straddle: Betty buys a straddle on Lehigh that has a strike price of $40.70. The premium of the call is $1.20 and the premium of the put is $1.95. Calcuate the net profit or loss on buying the straddle if at the time of expiration the price per share of Lehigh is $81.40. $
You purchase one Ruth April 25 put contract for a premium of $6.58. You hold the option until the expiration date, when Ruth stock sells for $32 per share. Calculate the profit/loss you will realize on the investment.
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