The following table lists prices of Amazon options in January 2018 when Amazon stock was selling for $1,400.Expiration DateApril 2018.July 2018January 2019ExercisePrice$1,2001,3001,400$1,2001,3001,400$1,2001,3001,400Call Price Put Price$132.70$31.1073.2070.1033.00134.20$53.55$161.70104.0062.55$210.00155.35112.0096.00156.05$88.05133.25190.00Suppose that by January 2019, the price of Amazon could either rise from its January 2018 level to $1,400 × 1.20 = $1,680.00 or fall to$1,400/1.20 $1,166.67.a.Percentage returnb. Percentage returnC. Which is riskier: the stock or the option?a. What would be your percentage return on a January expiration call option with an exercise price of $1,400 if the stock pricerose? (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?%%

Options are categorized into two major types as calls and puts where call provides a buying right to…

Answered: The following table lists prices of…

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 have the following information on six-month European options based on a common underlying stock: Call options: $70.00 strike options trade at $9.71. $72.50 strike options trade at $8.30. • $75.00 strike options trade at $6.98. ● Put options: • $75.00 strike options trade at $13.55. • $77.50 strike options trade at $15.58. • $80.00 strike options trade at $17.77. If the continuously compounded risk free rate is 5.30%, what does put call parity suggest is the current stock price? Report your answer without a dollar sign to four decimal places.
TDX stock is currently trading at $100. A 3-month call option in this stock has an exercise price of $105 and trading at $1 (the option premium). A put option with similar maturity period and strike price is trading at $0.5.i) Compute the theoretical value of call and put options if TDX stock price at the end of 3 months will be $95, or $100, or $105, or $110, or $115. ii) Draw diagrams showing TDX stock price and theoretical values of call and put. iii) If you purchase one stock and one put option today, what will be the total value of your portfolio at the end of 3 months? iv) Compute your return on investment or holding period return made in part (iii) above.
Required: Consider a 1-year option with exercise price $135 on a stock with annual standard deviation 10%. The T-bill rate is 3% per year. Find N(d1) for stock prices $130, $135, and $140. (Do not round intermediate calculations. Round your answers to 4 decimal places.) S N(d1) $ 130 $ 135 $ 140
The following limit orders for the XYZ stock have been submitted to the opening auction at the LSE: XYZ Limit Order Book Price Buys 21 20.875 20.75 20.625 20.50 20.375 20.25 20.125 20 10 15 20 10 5 10 What is the market clearing price? O A. some other price OB. 20.50 OC. 20.25 OD. 20.375 OE. 20.125 Sells 20 5 5 5 10 20 30
Call Options on a stock are available with strike prices of $35, $52.5 and $70, with the same expiration dates in 3 months. Their prices are $10, $5 and $1, respectively. Question Explain how the options can be used to create a Butterfly Spread. Show the graph with all details (premium, strike price, payoff line, etc).
You are given the daily closing prices of a stock from Jan 1, 2018 to Jan 5, 2018: Date Stock price Jan 1 Jan 2 Jan 3 Jan 4 Jan 5 A 5.00 B 5.50 C 6.00 At the end of Jan 1, 2018, Jie purchased the following options that expire on Jan 5, 2018: (a) Arithmetic average strike Asian call option. (b) Up-and-in call option with a barrier of 110 and strike of 105. For both options, the underlying asset is the stock and the payoff is determined using the last 4 daily closing prices. Determine Jie's total payoff on Jan 5, 2018. D Possible Answers E 105 6.50 109 7.00 112 110 111
Calculate the value of a call option for the following stock. Use the Black-Scholes formula. Time to expiration Standard deviation Exercise price Stock price Annual interest rate Dividend 6 months 50% per year $50 $50 3% 0 (Do not round intermediate calculations. Round your answer to 2 decimal places.) Value of a call option
On January 1, you sold one February maturity S&P 500 Index futures contract at a futures price of 2,412. If the futures price is 2,480 at contract maturity, what is your profit? The contract multiplier is $50. (Input the amount as positive value.)
The price of Newgen Corp. stock will be either $94 or $103 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 7.90%. (Do not leave any empty spaces; input a O wherever it is required. Omit "$" sign in your response.) a. Suppose the current price of Newgen stock is $104. What is the value of the call option if the exercise price is $94 per share? (Round the final answer to 2 decimal places.) Call option value b. Suppose the exercise price is $109 in part (a). What is the value of the call option now? Call option value
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
A 6-month put option on Smith Corp.'s stock has a strike price of $43.50 and sells in the market for $8.90. Smith's current stock price is $41. What is the option premium?
You sell a call option on Tesla stock with an exercise price of $150.00. The option expires after one month period as soon as the option premium is $12.00. what is the profit on this option is the stock price $180 at expiration?

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