A call option on a MST has a delta of 0.65. A trader has sold 1,500 options. What position should the trader take to hedge the position? A. Sell 650 shares B. Buy 975 shares C. Buy 650 shares D. Sell 975 shares
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Subject: algebra
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- One of the categories of options available to investors and speculators is LEPOs. Assuming 7.00 per cent margin, what would be the percentage return and dollar profit to an investor who purchased one LEPO (for 1000 shares) for a premium of $26 220 and later closed out the position when the LEPO premium was $28 430?A call option on a stock has a delta of 0.3. A trader has sold 1,000 options. What position such as buy or sell and many shares should the trader take to hedge the position and why?The stock price of BAC is currently $120 and a put option with strike price of $120 is $5. A trader goes long 300 shares of BAC stock and long 3 contracts of the put options. a. What is the maximum potential loss for the trader ? b. When the stock price is $140, what is the trader’s net profit
- You bought a $50 strike call option on a stock XYZ for $8.20 and then sold/wrote a $65 call option for $4.35. If the stock closes at $63 on expiration day, how much did you make from all transactions?For each of the 100-share options shown in the following table below; use the underlying stock price at expiration and other information to determine the amount of profit or loss an investor would have had. Option Type of option Cost of option Strike price per share Underlying stock price per share at expiration A Call $214 $48 $53 B Call $372 $45 $48 C Put $537 $63 $54 D Put $297 $32 $36 E Call $495 $27 $24 The profit (loss) experienced on option A is $ ? (Round to the nearest dollar. Enter a negative number for loss.)A collar is established by buying a share of stock for $54, buying a 6-month put option with exercise price $47, and writing a 6-month call option with exercise price $61. On the basis of the volatility of the stock, you calculate that for a strike price of $47 and expiration of 6 months, N(d1) = 0.7298, whereas for the exercise price of $61, N(d1) = 0.6374. Required: What will be the gain or loss on the collar if the stock price increases by $1? What happens to the delta of the portfolio if the stock price becomes very large? What happens to the delta of the portfolio if the stock price becomes very small?
- A stock is trading at $46.96 per share, and the 47.5 option is quoted at $5.60 bid and $6.00 ask. The next day the stock is up $2.87 on strong earnings. You see that the option had a theta of -.02 and a delta of .56. Based only on this information, how much extrinsic value should you expect the option's ask price to have? (Answer in dollars per share of option, i.e., 2.87 not 287).A stock has a current price of $267. A trader writes 9 naked option contracts on the stock, each contract covering 100 shares. The option price is $2, the strike price is $260, and the time to maturity is 4 months 1. What is the margin requirement if the options are call options (in $)? 2. What is the margin requirement if the options are put options (in $)?The stock price of BAC is currently $150 and a put option with strike price of $150 is $10. A trader goes long 300 shares of BAC stock and long 3 contracts of the put options with strike price of $150. a. What is the maximum potential loss for the trader?[x](sample answer: $105.75)b. When the stock price is $161 on the expiration, what is the trader’s net profit?[y](sample answer: $105.75)
- A collar is established by buying a share for 50, buying a 6-month put option with exercise price 45, and writing a call option with exercise price 55. On the basis of the volatility of the stock, you calculate that at a strike price of 45 and expiration of 6 months, N(d1) =0.6 whereas for the exercise price of 55, N(d1) = 0.35 What will be the gain or loss on the collar if the stock price increases by 1? What happens to the delta of the portfolio if the stock price becomes very large?A collar is established by buying a share of stock for $50, buying a 6-month put option with exercise price $45, and writing a 6-month call option with exercise price $55. On the basis of the volatility of the stock, you calculate that for a strike price of $45 and expiration of 6 months, N(d1) = .60, whereas for the exercise price of $55, N(d1) = .35.a. What will be the gain or loss on the collar if the stock price increases by $1?b. What happens to the delta of the portfolio if the stock price becomes very large?c. What happens to the delta of the portfolio if the stock price becomes very small?The share price of XYZ on April 24 is $124. A trader sells 200 put options on the stock with astrike price of $120 when the option price is $5. The options are exercised when the stock price is $110. What will be the trader’s result? Выберите один ответ: a. 1000$ gain b. 1500 loss c. 1000$ loss d. 1500$ gain e. 2000$ loss