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 part 2 of the question I cannot find a similar example of.

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 part 2 of the question I cannot find a similar example of.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter5: Financial Options

Section: Chapter Questions

Problem 1P

See similar textbooks

Similar questions

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 $)?
A stock has a current price of $257. A trader writes 10 naked option contracts on the stock, each contract covering 100 shares. The option price is $6, the strike price is $270, and the time to maturity is 4 months. Part 1 What is the margin requirement if the options are call options (in $)? Part 2 What is the margin requirement if the options are put options (in $)?
Finance 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 part 2 of the question I cannot find a similar example of.
A stock has a current price of $267. A trader writes 7 naked option contracts on the stock, each contract covering 100 shares. The option price is $2, the strike price is $230, and the time to maturity is 4 months. What is the margin requirement if the options are call options (in $)?
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).
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
12. The following are prices of call options traded on Pineapple inc., which pays no dividends Call Options Exercise price = $200 Exercise price = $205 one month $4.50 $3.00 three month $6.25 $5.00 six month $9.00 $7.50 The stock is trading at $202 and the annualized riskless rate is 2%. The standard deviation in ln(stock prices) (Based on historical data) is 15%. What is the implied standard deviation in the six month call with a strike price of $200? Please show solution on excel or with formula. Thanks
A trader shorts futures contract to sell 4,000 stocks for $4.50 per stock. The initial margin is $3,500 while the maintenance margin is $2,500. By what amount should the stock price increase or decrease for a margin call? By what amount should the stock price increase or decrease to withdraw $500 from the margin account?
On July 1, an investor holds 100,000 shares of a certain stock. The market price is $100 per share and the beta of the stock is 1.5. The investor would like to change the beta of the stock portfolio to 1.25 using the September S&P 500 E-Mini stock index futures contract. The futures price is 4,500 and one contract is for delivery of $50 times the index. What strategy should the investor follow?
The price of a stock is $64. A trader buys 1 put option contract on the stock with a strike price of $60 when the option price is $10. When does the trader make a profit? a. When the stock price is below $50 b. When the stock price is below $54 c. When the stock price is below $60 d. When the stock price is below $64
Suppose that call options on ExxonMobil stock with time to expiration 6 months and strike price $87 are selling at an implied volatility of 27%. ExxonMobil stock price is $87 per share, and the risk-free rate is 6%. Required: If you believe the true volatility of the stock is 31%, would you want to buy or sell call options? Now you want to hedge your option position against changes in the stock price. How many shares of stock will you hold for each option contract purchased or sold?
You shorted a call option on Intuit stock with a strike price of $38. When you sold (wrote) the option, you received $3. The option will expire in exactly three months' time. a. If the stock is trading at $49 in three months, what will your payoff be? What will your profit be? b. If the stock is trading at $35 in three months, what will your payoff be? What will your profit be? c. Draw a payoff diagram showing the payoff at expiration as a function of the stock price at expiration. d. Redo c, but instead of showing payoffs, show profits. Question content area bottom Part 1 a. The payoff of the short is $ short is $ enter your response here. enter your response here, and the profit of the. Please step by step answer.