The following price quotations are for exchange-listed options on Primo Corporation common stock.Strike Expiration Call Put55 February 7.21 0.48CompanyPrimo 61.12Required:With transaction costs ignored, how much would a buyer have to pay for one call option contract. Assume each contract is for 100shares.Amount for one call option contract

Options are the derivative instruments that provide the investor or holder a right to purchase or…

The following price quotations are for exchange-listed options on Primo Corporation common stock. Expiration Call Put February 7.21 0.48 Company Prino 61.12 Strike 55 Required: With transaction costs ignored, how much would a buyer have to pay for one call option contract. Assume each contract is for 100 shares. Amount for one call option contract

The following price quotations are for exchange-listed options on Primo Corporation common stock. Expiration Call Put February 7.21 0.48 Company Prino 61.12 Strike 55 Required: With transaction costs ignored, how much would a buyer have to pay for one call option contract. Assume each contract is for 100 shares. Amount for one call option contract

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

See similar textbooks

Similar questions

1. Three months ago an investment company bought for £8 a call option on a stock with an exercise price of £136. If the stock price at expiration of this option is £147. Select which of the following best describes the option value, the decision of the Investment Company and the return on investment thereon. A. Option value Decision Profit / (loss) % Exercise price – Stock price Exercise 37.5% B. Option value Decision Profit / (loss) % Stock price – Exercise price Don’t Exercise 2.2% C. Option value Decision Profit / (loss) % Exercise price – Stock price Exercise 2.2% D. Option value…
Consider a particular stock with call and put options. The date is January 12, and the price of the stock is P185. The table below shows the closing prices of four options, two of which expire in February and May and have exercise prices of 175 and 205, respectively. The February options will expire on February 16th, while the May options will expire on October 20th. These specific selections are of the American style.
The following table lists prices of Amazon options in January 2018 when Amazon stock was selling for $1,200. Exercise Price Expiration Date April 2018 Call Price Put Price $ 31.10 $1,200 1,300 1,400 $1,200 1,300 1,400 $1,200 1,300 1,400 $132.70 73.20 70.10 134.20 $ 53.55 96.00 33.00 July 2018 $161.70 104.00 62.55 156.05 January 2019 $210.00 $ 88.05 155.35 133.25 112.00 190.00 Suppose that by January 2019, the price of Amazon could either rise from its January 2018 level to $1,200 × 1.25 = $1,500.00 or fall to $1,200/1.25 = $960.00. a. What would be your percentage return on a January expiration call option with an exercise price of $1,200 if the stock price rose? (Round your answer to 2 decimal places.) b. What would be your percentage return if the stock price fell? (Negative value should be indicated by a minus sign.) c. Which is riskier: the stock or the option? a. Percentage return b. Percentage return Which is riskier: the stock or the option? % (100) % Option C.
You buy 1 put contract with a strike price of $60 on a stock which you own 100 shares. What are the expiration total values for this position (100 stock shares plus 1 put contract) for prices of $50 and $60 if the put premium is $1.80?
The following table lists the options on Amazon shares in January 2018 when Amazon stock was selling for $1,210. Exercise Price $1,210 1,310 1,410 Expiration Date July 2018 Call Price $161.90 104.10 62.65 a. Call option with exercise price of $1,210 b. Put option with exercise price of $1,210 C. Call option with exercise price of $1,310 d. Put option with exercise price of $1,310 e. Call option with exercise price of $1,410 f. Put option with exercise price of $1,410 Use the data in the table to calculate the payoff and the profits for investments in each of the following July maturity options, assuming that the stock price on the expiration date is $1,305. (Negative amounts should be indicated by a minus sign. Round your "Profit" answers to 2 decimal places.) Put Price $53.56 96.10 156.15 Payoff Profit
Nikulbhai
Stock in Cheezy-Poofs Manufacturing is currently priced at $50 per share. A call option with a $50 strike and 90 days to maturity is quoted at $1.95. Compare the percentage gains and losses from a $97,500 investment in the stock versus the option in 90 days for stock prices of $40, $50, and $60. (Leave no cells blank - be certain to enter "0" and select "None" wherever required. Input all amounts as positive values. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Options % gain/loss Stock % gain/loss $40 $50 $60
Aa.36. Accounting for Call Options On January 2, Starz Inc. established an agreement with Silver Co. allowing Starz Inc. to call 100 shares of Gold Inc. stock at a strike price of $45 per share through June 30 of the following year. On January 2, the current market price of Gold Inc. is $45 and the option premium is $200. On June 30, the fair value of the option is $900. Required a. Prepare the journal entry on January 2 to record the purchase of the call option. b. Prepare the entry to adjust the call option to fair value on June 30. At what price per share of Gold Inc. will the call option become valuable to Starz Inc.?● Note: Round your answer to the nearest penny.
8
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 $123 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? c) What is biggest loss that you can suffer on this position? d) What is the realized profit/loss of your counterparty (the buyer of this call option)? Please briefly explain the calculations as well, thanks!
Stock in Cheezy-Poofs Manufacturing is currently priced at $50 per share. A call option with a $50 strike and 90 days to maturity is quoted at $1.95. Compare the percentage gains and losses from a $97,500 investment in the stock versus the option in 90 days for stock prices of $40, $50, and $60. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Leave no cells blank - be certain to enter "0" and select "None" wherever required. Input all amounts as positive values.) $ 40 $ 50 $ 60 Options % gain/loss Stock % gain/loss
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?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS