A call option on a stock trading at $58 has an exercise price of $47. The call option is _____ Check all that apply A. in the money B. out of the money C. at the money
Q: Suppose that call options on a stock with strike prices $100 and $106 cost $8 and 55, respectively.…
A: Call options are defined as the financial contracts, which provides the option the purchaser the…
Q: Assume you buy 20 put options at a price of $5 each. The stock is currently priced at $46 and the…
A: option index call or put give owner right to purchase or sell on mentioned date but no obligation…
Q: A stock trades for shs. 120. A put on this stock has an exercise price of shs. 140 and is about to…
A: When the holder of the option having the right but it is not the obligation. They are having the…
Q: u have taken a long position in a call option on IBM common stock. The option has an exercise price…
A: The premium on an option is made up of intrinsic and extrinsic value. Intrinsic value is the…
Q: A stock is currently selling for $22.00 per share. Ignoring interest, determine the intrinsic value…
A: Call option gives option buyer the right to by the Stock at a strike price at a specified time in…
Q: A stock has a beta of 1.88. The risk free rate is 1.775% and the market risk premium is 5%. What is…
A: The Capital Asset Pricing Model (CAPM) is a mathematical model that describes the relationship…
Q: a) What is the price of a $35 strike call? Assume S = $38.50, σ = 0.25, r = 0.06, the stock pays no…
A: Due to uncertain future factors, risk of security prices is rises. To avoid this risk, put and call…
Q: A PUT and a CALL option are written on a stock with a strike price of $60. The options are held…
A: Strike price = $60 Spot Price = $75 Call Premium = $16
Q: A. What is the price of a $30 strike put? Assume S = $28.50, σ = 0.32, r = 0.04, the stock pays a…
A: A. Answer = $2.75 Solution: As per Black Scholes model Value of put option: P =…
Q: Investor B sold a put option and bought a call option when the stock price is $30. The strike price…
A: An option gives the right but not the obligation to the buyer of the option to exercise the…
Q: uppose you bought stock XYZ December RM8 put options for40 sen. What is the strike price? Suppose…
A: Put option gives the opportunity to sell the stock on expiration but no obligations to do that. Put…
Q: Suppose company XYZ's stock is trading at $68.3. You currently hold a call option with a strike…
A: A call option is an instrument which provides its holder an option to buy an underlying asset on a…
Q: A stock has a price of $73, which can later be $77 or $69 with equal probabilities. The options with…
A: Stock price = $73 Option with exercise price = $77 Call = $1.53 Put = $1.73 Gain or loss = ?
Q: Whats the profit of the "Straddle" when stock price is $15, $20, $25, $30, $35, $40, $45, $50, $55,…
A: In the given question we require to calculate the profit of the "Straddle" when stock price is $15,…
Q: Assume the Black-Scholes framework holds. Consider an option on a stock. You are given the following…
A: Here, Stock Price is 50 Option Price is 3.00 Option Delta is 0.611 Option Gamma is 0.020 Option…
Q: A PUT and a CALL option are written on a stock with a strike price of $60. The options are held…
A: Strike Price = $60 Spot price = $75 Call premium = $16 Put Premium = $3
Q: You buy a share of stock, write a 1-year call option with X= $65, and buy a 1-year put option with…
A: Risk free interest rate is minimum and guaranteed rate which investor get during the life of the…
Q: Calculate (i) the cashflow today, (ii) the cashflow at maturity, and (iii) the net profit from your…
A: In this we have to calculate the cash flow at beginning and MATURITY and than find out profit.
Q: An option is trading at $3.45. If it has a delta of .78, what would the price of the option be if…
A: Options are derivative contract that provides holder a right not obligation to trade certain assets…
Q: You have purchased a put option on ABC common stock for $2 per contract. The option has an exercise…
A: Put option is the right but not the obligation of the holder to sell the underlying asset at its…
Q: stock price of Merck falls to $46, rate of return of your put option is
A: gain for put = strike price - stock price = 50-46 =4
Q: Suppose that a trader buys two call options and one put option. A one-year call option on a stock…
A: Call is in the money when prices go up from strike prices and put is in the money option when prices…
Q: The risk-free rate is 1.13% and the market risk premium is 6.26%. A stock with a β of 0.84 will have…
A: Given: Risk free rate = 1.13% market risk premium = 6.26% Beta = 0.84
Q: A stock has a required return of 16%, the risk-free rate is 5.5%, and the market risk premium is 4%.…
A: A model that represents the relationship of the required return and beta of a particular asset is…
Q: Use the Black-Scholes formula to find the value of a call option based on the following inputs. (Do…
A: Call option Valuation using Black- scholes model Facts Stock price = 54 Exercise price = 63 Rate…
Q: Consider the following options on stock X: Option Delta Gamma Vega A 0.5 2.2 1.8 В 0.8 0.6 0.2 -0.40…
A: Solution- Option Delta Gamma Vega Quantity Position A 0.5 2.2 1.8 1,000 LONG B 0.8 0.6 0.2…
Q: Suppose company XYZ's stock is trading at $53.86. You currently hold a put option with a strike…
A: A put option is an instrument which provides its holder an option to sell an underlying asset on a…
Q: You buy a share of stock, write a 1-year call option with X= $95, and buy a 1-year put option with X…
A: Call option writing refers to selling a call option to another investor where the buyer has complete…
Q: A put option on a stock has an exercise price of $31. If the stock price at expiration is $33.40,…
A: given, K = $31 S= $33.40
Q: all options on this stock are priced at £10, £4, £5.5 and £1, respectively. These have stril rices…
A: Arbitrage opportunities exist if there are misspricing in the market and loop holes exist in the…
Q: Answer the following two questions with respect to the table below. A financial institution has the…
A: First the delta and gamma of the portfolio is calculated as sum of the product of delta/gamma of the…
Q: PUT and a CALL option are written on a stock with a strike price of $60. The options are held until…
A: Put option believe that prices will go down and there will be profit on put if prices goes down.
Q: 3. A stock sells for $110. A call option on the stock has an exercise price of $105 and expires in…
A: Black-Scholes Model Black-Scholes is a pricing model that uses six factors, including, strike price,…
Q: Assume a stock is selling for GH¢48.50 with options available at 40, 50, and 60 strike prices. The…
A: A put option is an agreement that grants the option buyer the opportunity, but not the…
Q: A stock has a price of $73, which can later be $77 or $69 with equal probabilities. The options with…
A: A covered call is combination of long position of a stock and short position of a call option. A…
Q: 2. The current market price of a share of AT&T stock is $50. If a call option on this stock has a…
A: In case of Call option: If Underlying Asset price > call strike Price, then call option is in…
Q: a) what is the price of a $35 strike call? Assume S=$38.50, σ =0.25, r=0.06, the stock pays no…
A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…
Q: ABC stock is currently trading at a market price (S) of $50. You do not own the stock, but you are…
A: Hello. Since your question has multiple sub-parts, we will solve the first three sub-parts for you.…
Q: A. An option is trading at $5.03. If it has a delta of -.56, what would the price of the option be…
A: Delta of an option is the change in price of option to change in price of underlying.
Q: A PUT and a CALL option are written on a stock with a strike price of $60. The options are held…
A: Note: I am supposed to provide the solution to the question first only. Please repost the remaining…
Q: A stock is currently selling for $52.01 a share. A call option on this stock with an exercise price…
A: Spread is a strategy where a person takes the position of both holder and writer. Bull Spread with…
A call option on a stock trading at $58 has an exercise price of $47.
The call option is _____
Check all that apply
A. in the money
B. out of the money
C. at the money
Step by step
Solved in 2 steps
- In 1973, Fischer Black and Myron Scholes developed the Black-Scholes option pricing model (OPM). (1) What assumptions underlie the OPM? (2) Write out the three equations that constitute the model. (3) According to the OPM, what is the value of a call option with the following characteristics? Stock price = 27.00 Strike price = 25.00 Time to expiration = 6 months = 0.5 years Risk-free rate = 6.0% Stock return standard deviation = 0.49Assume a stock is selling for GH¢48.50 with options available at 40, 50, and 60 strike prices.The 50 call option price is at 2.75.a. What is the intrinsic value of the 50 call?b. Is the 50 call in the money?c. Are the 40 and 60 call options in the money?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 currently trades at $100. Consider a put and a call option written on this stock with strike price $105. Which of the following statements is most accurate? A.The call option is in-the-money and the put option is out-of-the-money B.The call option is out-of-the-money and the put option is in-the-money C.Both options are in-the-money D.Cannot determine without further informationA non – dividend – paying stock with a current price of $52, the strike price is $50, the risk free interest rate is 12% pa, the volatility is 30% pa, and the time to maturity is 3 months? a) Calculate the price of a call option on this stock b) What is the price of a put option price on this stock? c) Is the put-call parity of these options hold?Assume a stock with an option with the information as follows. • Stock purchased price was $113.• Call option on the stock was purchased at $4. • Call option has strike price at $115.• the stock price is $117on expiration date Please explain the Call Options Payoff Diagrams below, why it plot like this (please explain step by step) . Thank you for your answering
- show this on a diagram please. An investor makes the following three investments: (i) the purchase of a stock for £38(ii) the purchase of a put option for £0.50 with a strike price of £35 and (iii) the sale ofa call option (ie. writing a call option) for £0.50 with a strike price of £40 . What is the maximum profit and loss for this position?Suppose that both a call option and a put option have been written on a stock with an exerciseprice of $40. The current stock price is $42, and the call and put premiums are $3 and $0.75,respectively. Calculate the profit to positions of both the short call and the long put with an expiration day stock price of $43.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?
- A stock has a spot price of $35. Its May options are about to expire. One of its puts is worth $5 and one of its calls is worth $5. The exercise price of the put must be ___A__ and the exercise price of the call must be ___B__.You use the Black-Scholes-Merton model for a put option on a stock. You calculate N(d1) = 0.60 and N(d2) = 0.56. a) What is the delta of the put option? b) You short 100 put options. How would you hedge your delta exposure using the underlying stock? How many shares would you need to buy or sell?You use the Black-Scholes-Merton model for a put option on a stock. You calculate N(d1) = 0.60 and N(d2) = 0.56. a) What is the delta of the put option? Solution for A = -0.40 b) You short 100 put options. How would you hedge your delta exposure using the underlying stock? How many shares would you need to buy or sell?