3. You have $150,000 for speculating with options and know the market value tendency is falling. Strike = $80 Call = $7 / option Put = $10 / option Probable market values at maturity: 60, 70, 80, 90, 100. Size of contract: one share. Required: a) Show the net results for each market value. b) What would be the maximum loss? c) What would be the equilibrium market value?

3. You have $150,000 for speculating with options and know the market value tendency is falling. Strike = $80 Call = $7 / option Put = $10 / option Probable market values at maturity: 60, 70, 80, 90, 100. Size of contract: one share. Required: a) Show the net results for each market value. b) What would be the maximum loss? c) What would be the equilibrium market value?

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter11: Managing Transaction Exposure

Section: Chapter Questions

Problem 35QA

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