Suppose you buy a January expiration put option on 200 shares with the exercise price of $45. If the stock price at optionexpiration is $42, will you exercise your put? What is the net profit/loss on your position? (Round your answer to the nearestdollars)ExpirationStrikeCallPutMay 20 20224014.210.12May 20 2022459.320.32May 20 2022504.81.05Jan 20 20234014.61.19Jan 20 20234510.52.14Jan 20 2023507.23.70Yes, net profit of $172O No, net profit of $457O No, net loss of $457O Yes, net loss of $172

solution concept Put option means the right to sell the stock Strike price means the price at which…

Answered: Suppose you buy a January expiration…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Question 4?
Consider the following Put Option: May 50 trading at $3.15/share May is the expiration 50 is the Strike Price$3.15 is the PremiumIf, at expiration, the stock price is $40, the Buyer (to Open) would have a TOTAL gain or loss of.....(not per share) if a loss use the '-' sign
solve all four from a to d
Question 4. A stock that pays no dividends has price today of 100. In one year’s time the stock is worth 110 with probability 0.75 and 85 with probability 0.25. The one-year annually compounded interest rate is 5%. a) Calculate the forward price of the stock for a forward contract with maturity one year. b) Calculate the price of a one-year European put option with strike 100. c) Suppose you observe that the put option in part (b) has a market price of 4. Determine an arbitrage portfolio and calculate how much profit is generated at time T = 1 by this portfolio.
Suppose you own a put option on Apple stock with a strike price of $150. Suppose it is the expiration date of the option and the current stock price of Apple is $75. What payoff will you receive from making an optimal exercise decision on your option? 1. -$75 2. $0 3. $75
What is the price of a $25 strike call? Assume S = $23.50, \sigma 0.24, г 0.055, the stock pays a 2.5%continuous dividend and the option expires in 45 days?
In January 2023 Apple shares are priced at $200 a share. You believe that they are considerably overvalued and are worth only $120 a share. June 2023 put options on a strike price of $210 a share is currently valued at $18 per share. Each put contract is based on 100 shares. (i) What is the intrinsic value of the put option per share? Explain your reasoning. (ii) What is the time value of the put option per share? (iii) If we arrive at expiry in June and you are proved correct with Apple shares selling for $120, what is your total net dollar profit (+) or loss (-) on a single put option contract in dollars bearing in mind the put option is based on a contract of 100 shares? (iv) What will be the total cash settlement by the option writer if the Apple share price expires at $120 per share in June 2023? (v) What is your net dollar profit (+) or loss (-) as a holder of the put contract (based on a contract size of 100 shares) if we arrive at expiry in June and you are wrong and Apple…
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
You bought a $50 strike call option on a stock XYZ for $8.20 and then sold/wrote a $65 call option for $4.35 If the stock closes at $49 on expiration day, how much did you lose at expiration?
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