TION 30 Johnson & Johnson (ticker:JNJ) is traded at $172.21 per share when Nancy sold a call option today. The call premium is $3.05 and the exercise price is $180 The option will be expired on Jan. 20, 2024. a. What is Nancy's expectation about JNJ's price between now and expiration date? Also, state reasons why sellling a call is beneficial given her expectation of the price movement. b. What are Nancy's maximum profit and maximum loss? c. Show the profit/loss if, at the expiration date, the JNJ price is (1) $150, (2) $182, (3) $190. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac).

TION 30 Johnson & Johnson (ticker:JNJ) is traded at $172.21 per share when Nancy sold a call option today. The call premium is $3.05 and the exercise price is $180 The option will be expired on Jan. 20, 2024. a. What is Nancy's expectation about JNJ's price between now and expiration date? Also, state reasons why sellling a call is beneficial given her expectation of the price movement. b. What are Nancy's maximum profit and maximum loss? c. Show the profit/loss if, at the expiration date, the JNJ price is (1) $150, (2) $182, (3) $190. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac).

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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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
Consider April 2023 expiration call option on a share of AELZ stock with an exercise price of K95 per share selling on March 2, 2023 for K1.35. Exchange traded options expire on the third Friday of the expiration month, which for this option was April, 20. On March 2, AELZ sells for K90.90. Would you exercise the option? On April 20, AELZ sells for K96, what would be the value of the option at expiration? How much profit will the call holder make?
Solve question b
13 You purchased four call option contracts with a strike price of $25.20 and an option premium of $.84. You held the option until the expiration date. On the expiration date, the stock was selling for $22.50 a share. What is the total profit or loss on your option position? Skipped eBook Mc Graw Hill Multiple Choice O O O O O -$336 -$744 $1,416 $744 -$1,416
a) Tembo holds a one-year put option on Shoprite common stock. The put option canbe exercised at K50. Assume that the expiration date has arrived and the premium isK3. What is the value of the Shoprite put option on the expiration date if:Shoprite common stock is selling at K56 per share?
Contract Name Last Trade Date Last Price Bid Ask Change % Change Volume Open Interest Implied Volatility AAPL200417C00105000 (Links to an external site.) 2019-11-19 3:53PM EST 105.00 (Links to an external site.) 160.65 160.75 165.40 0.00 - 20 100 78.61% 7. Is this contract a call or a put option? 8. How much do you need to pay to buy this option contract? Hint: when you buy the contract, you need to use Ask price.
PROTECTIVE PUTS Current stock price for Amazon is $810. A put option on Amazon stock with the exercise price of $810 and maturity of 1 month sells at $5 premium. Ignore interests. (1)Plot the payoff against Amazon’s stock price if you buy only Amazon stock What is your max gain? What is your max loss? (2)Plot the payoff against Amazon’s stock price if you buy only put option on Amazon stock What is your max gain? What is your max loss? (3)Plot the payoff against Amazon’s stock price if you buy both Amazon stock and put option on Amazon stock What is your max gain? What is your max loss?
Profit on Option You have purchased a call option contract on Dash common stock. The option has an exercise price of $32.00 and Dash’s stock currently trades at $30.00. The option premium is quoted at $2.20. Calculate your net profit on the option contract if Dash’s stock price rises to $35.00 and you exercise the option. Calculate your net profit on the option contract if Dash’s stock price rises to $33.00 and you exercise the option. c-1. If the stock price is $31.00, what would be the gain or loss if you exercise or not exercise the option. c-2. Based on your answers above would it be more profitable to exercise the option or not exercise the option?
Straddle problem Given a stock with a current strike price of $25 and the following information; Write 1 ABC September 25 Calls @ 1Write 1 ABC September 25 puts @ 3 What is the total premium paid? (assume 1 contract = 100 shares) What is the maximum investor return? What is the maximum investor loss? Why do investors use straddles? If an investor buys a derivative position, are they long or short?
You purchase one Ruth April 25 put contract for a premium of $6.58. You hold the option until the expiration date, when Ruth stock sells for $32 per share. Calculate the profit/loss you will realize on the investment.
Matterhorn Mountain Gear is evaluating two projects with the following cash flows: Year Project X Project Y 0 −$ 316,200 −$ 293,450 1 147,700 138,100 2 165,200 155,300 3 130,300 121,050 What interest rate will make the NPV for the projects equal?
6. An investor took a long position on an American style call option on Tesla in June with an expiration date at the end of December in the same year. The premium is 38$/contract and the strike price is 1030$/share. One contract is 100 shares. Following the purchase, the price rose and in August the investor decided to exercise the option before the expiration date. How much did the investor with the short position in this option lose/win if the price of Tesla was in August 1073$/share? Draw the payoff diagram.

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