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spreadsheet.) Strike $31.00 $33.50 Calls Expiration November November QLT: Materials-$32.83 Price $1.24 $1.24 GOTO Puts $31.00 $33.50 Strike Expiration Price November $2.59 November $2.24 If you are wrong and the price of XLB increases to $35.50 on the expiration date, the profit $224 (Round to the nearest dollar. Enter a negative number for a loss)

spreadsheet.) Strike $31.00 $33.50 Calls Expiration November November QLT: Materials-$32.83 Price $1.24 $1.24 GOTO Puts $31.00 $33.50 Strike Expiration Price November $2.59 November $2.24 If you are wrong and the price of XLB increases to $35.50 on the expiration date, the profit $224 (Round to the nearest dollar. Enter a negative number for a loss)

Essentials Of Investments
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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You believe that oil prices will be rising more than expected, and that rising prices will result in lower earnings for industrial companies that use a lot of petroleum-related products in their operations. You also believe that the effects on this sector will be magnified because consumer demand will fall as oil prices rise. You locate an exchange traded fund, QLT, that represents a basket of industrial companies. You don't want to short the ETF because you don't have enough margin in your account. QLT is currently trading at $32.83. You decide to buy a put option (for 100 shares) with a strike price of $33.50, priced at $2.24. What is your profit if you are wrong and the price of XLB increases to $35.50 on the expiration date? (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Strike $31.00 $33.50 QLT: Materials-$32.83 Calls Expiration Price November $1.24 November $1.24 Cam Strike $31.00 $33.50 Puts Expiration Price November $2.59 November $2.24 If you are wrong and the price of XLB increases to $35.50 on the expiration date, the profit $224 (Round to the nearest dollar. Enter a negative number for a loss.)
Transcribed Image Text:You believe that oil prices will be rising more than expected, and that rising prices will result in lower earnings for industrial companies that use a lot of petroleum-related products in their operations. You also believe that the effects on this sector will be magnified because consumer demand will fall as oil prices rise. You locate an exchange traded fund, QLT, that represents a basket of industrial companies. You don't want to short the ETF because you don't have enough margin in your account. QLT is currently trading at $32.83. You decide to buy a put option (for 100 shares) with a strike price of $33.50, priced at $2.24. What is your profit if you are wrong and the price of XLB increases to $35.50 on the expiration date? (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Strike $31.00 $33.50 QLT: Materials-$32.83 Calls Expiration Price November $1.24 November $1.24 Cam Strike $31.00 $33.50 Puts Expiration Price November $2.59 November $2.24 If you are wrong and the price of XLB increases to $35.50 on the expiration date, the profit $224 (Round to the nearest dollar. Enter a negative number for a loss.)
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