The cooked-up Spread Trade. You are bullish on Ford motor company (F). You are bullish on F, and want to take a position. You think that today provides an opportunity as they have taken a hit on their price. You feel that the true intrinsic value of the firm is $15 a share. You decide that the December calls giving you about eight months of exposure is optimal, and you have the data on the calls below. You also feel that the maximum value that the firm could have under the best circumstance is $17 a share. Your first spread trade idea. You decide you want to decide to purchase (long) a $12 call option. To decrease the cost, you decide you want to sell (short) ten $17 calls. If you made this trade, what is the: a) Ford’s breakeven price for the trade
The cooked-up Spread Trade. You are bullish on Ford motor company (F). You are bullish on F, and want to take a position. You think that today provides an opportunity as they have taken a hit on their price. You feel that the true intrinsic value of the firm is $15 a share. You decide that the December calls giving you about eight months of exposure is optimal, and you have the data on the calls below. You also feel that the maximum value that the firm could have under the best circumstance is $17 a share. Your first spread trade idea. You decide you want to decide to purchase (long) a $12 call option. To decrease the cost, you decide you want to sell (short) ten $17 calls. If you made this trade, what is the: a) Ford’s breakeven price for the trade
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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Question
The cooked-up Spread Trade. You are bullish on Ford motor company (F). You are bullish on F, and want to take a position. You think that today provides an opportunity as they have taken a hit on their price. You feel that the true intrinsic value of the firm is $15 a share. You decide that the December calls giving you about eight months of exposure is optimal, and you have the data on the calls below. You also feel that the maximum value that the firm could have under the best circumstance is $17 a share.
Your first spread trade idea. You decide you want to decide to purchase (long) a $12 call option. To decrease the cost, you decide you want to sell (short) ten $17 calls. If you made this trade, what is the:
a) Ford’s breakeven price for the trade
Transcribed Image Text:Calls for December 15, 2023
Contract Name
F231215C00003000
F231215C00005000
F231215C00006000
Last Trade Date
2023-04-13 9:39AM EDT
2023-03-16 12:59PM EDT
2023-04-13 9:39AM EDT
F231215C00007000 2023-04-18 12:11PM EDT
F231215C00008000 2023-04-13 11:07AM EDT
F231215C00009000 2023-04-13 10:18AM EDT
F231215C00010000
2023-04-18 3:59PM EDT
10.00
F231215C00011000
2023-04-18 2:15PM EDT
11.00
F231215C00012000 2023-04-19 10:46AM EDT 12.00
F231215C00013000 2023-04-19 10:52AM EDT 13.00
F231215C00014000 2023-04-19 11:12AM EDT 14.00
F231215C00015000 2023-04-19 11:17AM EDT 15.00
F231215C00016000 2023-04-18 11:57AM EDT 16.00
F231215C00017000 2023-04-19 11:02AM EDT 17.00
F231215C00018000 2023-04-19 9:49AM EDT 18.00
2023-04-18 9:31AM EDT 20.00
Strike Last Price Bid Ask Change % Change Volume Open Interest
3.00
9.35 9.20 9.35
0.00
6.85 7.45 7.60
0.00
0.00
F231215C00020000
5.00
6.00
7.00
8.00
9.00
6.50 6.20 6.30
5.75 5.30 5.40
4.60 4.40 4.50
3.70 3.60 3.65
0.00
0.00
0.00
-0.42 -12.92%
0.00
1
0.10 0.07 0.09 0.00
1
3
2.83 2.82 2.87
2.52 2.17 2.21
1.64 1.62 1.65
-0.27 -14.14% 40
1.17 1.16 1.18 -0.24 -17.02% 464
0.81 0.80 0.82 -0.20 -19.80% 392
0.56 0.54 0.56 -0.14 -20.00%
0.47 0.36 0.38
0.00
0.25 0.24 0.25 -0.06 -19.35%
27
0.16 0.16 0.17 -0.05 -23.81% 20
200
5
14
2
9
3
10
8
6
11
47
435
13
1,468
699
1,784
2,829
2,046
2,700
3,124
3.451
559
822
Implied Volatility
93.75%
84.38%
34.38%
46.68%
44.53%
42.29%
40.19%
39.21%
38.18%
36.87%
35.89%
35.30%
35.01%
34.62%
34.67%
35.94%
![Ford Motor Company (F)
NYSE - Nasdaq Real Time Price. Currency in USD
12.29 -0.44 (-3.46%)
As of 11:42AM EDT. Market open.
[5] Dividend F announced a cash dividend of 0.15 with an ex-date of Apr. 25, 2023
Summary Company Insights
Previous Close
Open
Bid
Ask
Day's Range
52 Week Range
12.73
12.60
12.26 x 21500
12.27 x 41800
12.17 12.54
10.61-16.68
☆ Follow 88 Visitors trend 2W→ 10W ↑ 9M ↑
Chart
Conversations
Market Cap
Beta (5Y
Monthly)
PE Ratio (TTM)
EPS (TTM)
Earnings Date
Forward
Dividend & Yield
Statistics Historical Data Profile Financials
49.1B 1D 5D 1M 6M YTD 1Y SY Max
1.56
N/A
-0.49
May 02, 2023
0.60 (4.79%)
Analysis Options
*Full screen
12.00
12.73
12.57
12.33
12.28
12.10](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F32066021-45ff-4096-8829-778c96de06e3%2Fd8d6355e-54f1-4030-a0af-cd7e85bda318%2Fv9n4sbp_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Ford Motor Company (F)
NYSE - Nasdaq Real Time Price. Currency in USD
12.29 -0.44 (-3.46%)
As of 11:42AM EDT. Market open.
[5] Dividend F announced a cash dividend of 0.15 with an ex-date of Apr. 25, 2023
Summary Company Insights
Previous Close
Open
Bid
Ask
Day's Range
52 Week Range
12.73
12.60
12.26 x 21500
12.27 x 41800
12.17 12.54
10.61-16.68
☆ Follow 88 Visitors trend 2W→ 10W ↑ 9M ↑
Chart
Conversations
Market Cap
Beta (5Y
Monthly)
PE Ratio (TTM)
EPS (TTM)
Earnings Date
Forward
Dividend & Yield
Statistics Historical Data Profile Financials
49.1B 1D 5D 1M 6M YTD 1Y SY Max
1.56
N/A
-0.49
May 02, 2023
0.60 (4.79%)
Analysis Options
*Full screen
12.00
12.73
12.57
12.33
12.28
12.10
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