Use the option quote information shown here to answer the questions that follow. Thestock is currently selling for $73.Option andNY CloseRWJExpiration Strike PriceMarchAprilJulyOctober68686868Volume24318315273CallsLast4.5010.3511.2012.10PutsVolume1731405624Last4.609.3512.8011.75 b-1. Are the put options in the money?O InO Outb-2. What is the intrinsic value of an RWJ Corporation put option contract? (Do not roundintermediate calculations and round your answer to the nearest whole number,e.g., 32.)Intrinsic valuec. Two of the options are clearly mispriced. Which ones? (Select all that apply)00000CMarch callApril callOctober callMarch putOctober putApril put

A put option is a financial contract that gives the holder (the buyer) the right, but not the…

Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $73. Option and NY Close RWJ Expiration Strike Price March April July October 68 68 68 68 Volume 243 183 152 73 Calls Last 4.50 10.35 11.20 12.10 Puts Volume 173 140 56 24 Last 4.60 9.35 12.80 11.75

Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $73. Option and NY Close RWJ Expiration Strike Price March April July October 68 68 68 68 Volume 243 183 152 73 Calls Last 4.50 10.35 11.20 12.10 Puts Volume 173 140 56 24 Last 4.60 9.35 12.80 11.75

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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5. Gvalt stock is currently selling for $40 and a 4 month call on Gvalt with an exercise price of $35 is selling $9. a) If you write the call, what is your maximum potential profit? b) Under what condition would this profit be obtained? c) What will be your loss if you wrote the option and the stock was selling for $62 on the date of expiration?
3. A stock sells for $110. A call option on the stock has an exercise price of $105 and expires in 43 days. If the interest rate is 0.11 and the standard deviation of the stock’s return is 0.25. a) Calculate the call using the Black-Scholes model b) What would be the price of a put with an exercise price of $140 and the same time until expiration? c) How does an increase in the volatility and interest rate changes affect the underlying stock’s return on an option’s value? Explain.
The following table shows the options quotation in U.S. dollars for Big Walnut Nut Company for June 30 of this year. Option Closing Price Strike Price Calls–Last Quote September Puts–Last Quote September 1 $43.00 $47.00 $2.00 $2.20 2 $43.00 $41.00 $3.00 $1.20 3 $43.00 $49.00 $1.60 $2.60 If you could exercise the options listed only on the expiration date (the third Friday of September), then these options would be ____ options. Assuming that the options listed are American options, on June 30, which of the call options for Big Walnut Nut Company listed in the table is in-the-money? Option 2 Option 1 Option 3
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.
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
Suppose the following for European options: Stock price $94 3-month call options with strike price $97 3-month put option with strike price $98 1-year risk-free rate is 3%. The put option is trading ot $5 and there is an identical call option that is trading for $4. The arbitrage gain that can be made is equal to: O a. $2.00 b. $0.27 Oc. $3.00 O d. $1.27 O e $227
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?
Question 5: Suppose that a March call option to buy a share for $50 costs $2.50 and is held until March. Under what circumstances will the holder of the option make a profit? Under what circumstances will the option be exercised? Draw a diagram showing how the profit on a long position in the option depends on the stock price at the maturity of the option.Plz explain it
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?
Put-Call Parity The current price of a stock is $33, and the annual risk-free rate is 6%. A call option with a strike price of $31 and with 1 year until expiration has a current value of $5.58. What is the value of a put option written on the stock with the same exercise price and expiration date as the call option? Do not round intermediate calculations. Round your answer to the nearest cent. $
Back Open in Safa Consider a stock with a volatility of its logarithm of =0.2. The current price of the stock is $88 and it pays no dividends. Find the option prices on this stock that has an expiration date 4 months from now and a strike price of $90. The current interest rate is 15% compounded monthly. (Write the answers with two decimal places. x.yz) European call option premium European put option premium = $4 Home Courses Tasks Calendar Messages Back Open in Safa European put option premium =| American call option premium = 24 American put option premium = %24 %24
Maturity (days) Strike 66 Part1: SO 620 595.9355586 ● r (annualized) O 0.056329721 11% Option Type Call Use the data you are provided with on blackboard to replicate and interpret the following figures Call price as a function of the current underlying price S0 or put price as a function of the current underlying price SO depending on the data assigned to you. Carefully interpret the figures. Make sure you are not simply describing the figures but that you are answering the question of why we observe the pattern

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