IntFinQuestionsChapter6Options (3)

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For each of the following option positions state the risk profile, draw the profit and loss area and show the breakeven price on each graph. a) Long 7.00 call @ 0.30 b) Short 7.00 call @ 0.30 Risk profile: Risk profile: c) Long 7.00 put @ 0.20 d) Short 7.00 put @ 0.20 Risk profile: Risk profile:

Question 1. A call option with a strike price of $50 costs $2. A put option with a strike price of $45 costs $3. Explain how a strangle can be created from these two options. What is the pattern of profits from the strangle?

The value of an option at expiration is its _______. a. time value b. strike price c. premium d. intrinsic value Please answer fast i give you upvote.

A call option with a strike price of $50 costs $2. A put option with a strike price of $45 costs $3. Explain how a strangle can be created from these two options. What is the pattern of profits?

2. Graph a call to buy option and explain how its payoff is given. Explain when it is in the money, at the money and out of the money.

can you plsease answer question askedin photo Payoffs from Options What is the Option Position in Each Case? K = Strike price, S₁ = Price of asset at maturity Payoff Payoff K ST K ST Payoff K ST Payoff K ST

Suppose a put option has X=103 and Premium=8. As a seller of the put, what is the minimum profit/loss?

Suppose a put option has X=103 and Premium=16. For a strategy that sells this put, what is the minimum profit? 16

Using put-call parity, if the price of an At-the-Money Call option maturing in 1 day is $3.14, what is the price of an of an At-the-Money Put option maturing in 1 day (give an approximation)? A. $0.95 B. $2.86 C. $3.14 D.$3.26

a) Plot the payoff and profit of the following options based strategy: Buy 3 puts with strike 100, sell 4 puts with strike 110 and buy 1 put with strike 140. Explain all your calculations. b) If the price of the put with strike 100 is $8 and the price of the put with strike 140 is $16, what can you say about the price of the put with strike 110? Explain

Assume that price of a USDINR call option is quoted as INR 0.25 / 0.27 (bid price / ask price). Given this quote, at what price could a company buy the call option?

a-What are the five factors that affect an optlon's price? b-Discuss the impact of time to expiration on the option price by explaining to the graph below. 20 M2 egiadion (e

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Option traders often refer to “straddles”.” Here is an example: ∙ Straddle: Buy one call with exercise price of $100 and simultaneously buy one put with exercise price of $100. Price of the call option is $15 and price of the put option is $10. Draw the position diagram for the straddle.

fill the missing words: a. For  (  ) options, when the spot price is (  ) than(or equal to)the exercise price, then profit/loss equals the premium.  b. For (   ) options, when the spot price is (  )  than (or equal to) the exercise price, then the profit/loss will be equal to the option premium.

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?

A call option has a strike price of MYR3.00/SGD. If the option is exercised before maturity, what price in the followings would maximize gain? a. MYR3.00/SGD. b. MYR2.90/SGD. c. MYR3.05/SGD. d. MYR2.95/SGD.

A put option has a strike price of MYR3.00/SGD. If the option is exercised before maturity, what price in the followings would maximize gain? a. MYR3.00/SGD. b. MYR2.90/SGD. c. MYR3.05/SGD. d. MYR2.95/SGD.

Calculate the Black-Scholes price of a Call option where: S = $50 K = $45 T-t=.25 O = .20 r= .03 Show your work.

Using the attached option pricing model and related data K = 45; St = 40 t = 4/12; r =03; SD/σ = 0.4; N = 0.07, calculate the value of the call option

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The premium on a put option is primarily a function of the difference in spot price S relative to the strike price X, the time until maturity T, and the volatility of the currency o. P = f(S-X, T, o) For each characteristic of a put option, use the table to indicate whether that would lead to a higher put option premium or a lower put option premium (all else equal). Characteristic A lower spot price relative to the strike price A shorter time before expiration A higher level of volatility for the currency Higher Put Option Premium Lower Put Option Premium When using a put option to hedge receivables in an international currency, a U.S. based MNC can lock in the receive. minimum maximum amount of dollars it will

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?