Homework Help is Here – Start Your Trial Now!
Business
Finance
You purchase 36 call options on Greshak Corp. to increase returns on your equity portfolio.  The three month calls specify the strike price is $48.00 and require a premium of $3.25.  If Greshak's stock is trading at $52.00 at the time the options expire, what are your options worth?  What was your net profit (in dollars and as an annualized percentage)?  What would your profit in dollars

You purchase 36 call options on Greshak Corp. to increase returns on your equity portfolio.  The three month calls specify the strike price is $48.00 and require a premium of $3.25.  If Greshak's stock is trading at $52.00 at the time the options expire, what are your options worth?  What was your net profit (in dollars and as an annualized percentage)?  What would your profit in dollars

Essentials Of Investments
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
icon
Related questions
Question

You purchase 36 call options on Greshak Corp. to increase returns on your equity portfolio.  The three month calls specify the strike price is $48.00 and require a premium of $3.25.  If Greshak's stock is trading at $52.00 at the time the options expire, what are your options worth?  What was your net profit (in dollars and as an annualized percentage)?  What would your profit in dollars and as an annualized percentage had been if the stock instead sold for $51.00/share at expiration?  How about $50.00/share?  

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Options
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
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…
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