You want to buy 100 shares of XYZ stock and you don't want to pay more than $20 per share for it. Which option strategy would be the least expensive? 1. Sell one xyz 20 put for 53. 2. Buy one xyz 20 put for 51. 3. Buy one xyz 20 call for $2. 4. Sell one xyz 20 call for $4.
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You want to buy 100 shares of XYZ stock and you don't want to pay more than $20 per share for it. Which option strategy would be the least expensive? 1. Sell one xyz 20 put for 53. 2. Buy one xyz 20 put for 51. 3. Buy one xyz 20 call for $2. 4. Sell one xyz 20 call for $4.
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- You are long 1000 shares of XYZ stock. You want to stay in the position but are afraid of a move lower in the stock. The stock is currently at $125.94 and you only want to risk $6 from the current price. Which strategy would be best to accomplish your objective? a. covered call b. covered put c. straddle d. bull call spread e. protective putYou find that the bid and ask prices for a stock are $13.45 and $14.00, respectively. If you purchase or sell the stock, you must pay a flat commission of $15. If you buy 300 shares of the stock and immediately sell them, what is your total implied and actual transaction cost in dollars? Multiple Choice $180 O $15 O $195 $30A call option with a strike price of $50 costs $2. A put option with a strike price of $45 costs $3. Construct the profit table and graph from buying these two together. This strategy is called Strangle. Explain why would an investor invest in a Strangle.
- A call with a strike price of $50 costs $5. A put with the same strike price and expiration date costs $3. A straddle is created by buying both the call and the put. Construct a table that shows the profit from a straddle. For what range of stock prices would the straddle lead to a loss? Stock Price buy a put (K1=40) sell a put (K2=45) Total payoffs Please show workhe initial margin requirement on a stock purchase is 50% and the maintenance margin is 30%. You fully use the margin allowed to purchase 100 shares of XYZ at $25. If the price drop to the margin-call point, your broker will sell just enough of your shares to restore the initial margin requirement. How many shares will your broker sell Ignore interest on the loan.) Multiple Choice 334 400 462 667You buy a put option on IBM common stock. The option has an exercise price of $136 and IBM’s stock currently trades at $140. The option premium is $5 per contract.a. What is your net profit on the option if IBM’s stock price increases to $150 at expiration of the option and you exercise the option? b. How much of the option premium is due to intrinsic value versus time value?c. What is your net profit if IBM’s stock price decreases to $130?d. Draw the payout diagram at maturity on a short put option position, option premium = $2, and the same exercise price... (Please give the full solution I will upvote)
- How would you set up a covered call position on ABC stock that you don't already own? A. Sell 100 shares of ABC stock short, and then sell one ABC call. B. Buy 100 shares of ABC, and then sell 100 calls on ABC. C. Buy 100 shares of ABC stock, and then sell one ABC call option. D. Buy one ABC call, and buy 100 shares of ABC stock.2. [Straddle]Suppose AAPL current price is $200. You purchase 10 calls with strike price equal to $200. You also bought 10 puts with strike price equals to $200. (This is called an option straddle) The put price is listed at $1.5 and the call is listed at $1.6. 1. What is the cost to set up the straddle? 2. What is your profit/loss if AAPL price goes to $210? $188? Stay at $200? 3. What do you think about the straddle strategy? When you lose money on this straddle strategy?Suppose you construct a strategy based on options on a stock that is currently selling for $100. The strategy is as follows: Buy one call option having an exercise price of $95. Sell two calls having an exercise price of $100. Buy one call option having an exercise price of $105. All of the options are written on the same stock and all have the same expiration date. Compute the payoff (the dollars you receive) from this strategy at the expiration date for each of the following alternative stocks prices: $90, $95, $98, $100, $102, $105, and $110. What additional information would be required to determine whether your strategy had been profitable? What is the name of this strategy?
- Suppose that a call option to buy a share for $200 costs $10. What is the delta of this option today if the current stock price is $180? (ignore time value of the option) A. around 2 B. None of these answers are correct. C. around 0.5 D. close to 0 E. close to 1A call option with a strike price of $100 costs $5. A put option with a strike price of $85 costs $4. Explain how a strangle can be created from these two options. What is the cost of this strategy? When should I exercise my options? For what range of future stock prices would the strategy lead to a gain and what is the maximum gain you can receive? Prove your answer by providing an example. 5 For what range of future stock prices would the strategy lead to a loss and what is the maximum loss you could sustain? Prove it by giving an example.Consider two call options on the same stock. One has a strike price of 98 and the other has a strike price of 102. If the current stock price is 100, which would you expect to be more expensive? a. The 102 strike call b. They should have the same price c. The 98 strike call d. We do not have enough information to tell