Assume you purchase a put option contract (100 shares) for a price of 6.40 (each stock) for Microsoft (MSFT) that expire on August 12,2022 with the strike price of $285 on August 4, 2022. Look at the current price and fully explain whether you will exercise or not.
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Assume you purchase a put option contract (100 shares) for a price of 6.40 (each stock) for Microsoft (MSFT) that expire on August 12,2022 with the strike price of $285 on August 4, 2022. Look at the current price and fully explain whether you will exercise or not.
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- Assume we are in July, 2023. In July of 2023, the share prices of company B are $80 per share. You believe they should be $30 per share, and are thus overvalued. December 2023 put options on a strike price of $60 per share are currently valued at $5. Each put contract is based on 100 shares. a.) What is your net dollar profit or loss as a holder of the put contract (based ona contract size of 100 shares) if we arrive at expiry in December and you are wrong and Company B shares are selling for $100?Assume we are in July, 2023. In July of 2023, the share prices of company B are $80 per share. You believe they should be $30 per share, and are thus overvalued. December 2023 put options on a strike price of $60 per share are currently valued at $5. Each put contract is based on 100 shares. a.) What is your net dollar profit or loss as a holder of the put contract (based ona contract size of 100 shares) if we arrive at expiry in December and you are wrong and Company B shares are selling for $100? (Show your working in full)On January 2, 2020, Ayayai Company purchases a call option for $310 on Merchant common stock. The call option gives Ayayai the option to buy 1,090 shares of Merchant at a strike price of $49 per share. The market price of a Merchant share is $49 on January 2, 2020 (the intrinsic value is therefore $0). On March 31, 2020, the market price for Merchant stock is $53 per share, and the time value of the option is $200. Prepare the journal entry to record the purchase of the call option on January 2, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 2, 2020 enter an account title to record the transaction on January 2, 2020 enter a debit amount enter a credit amount enter an account title to record the transaction on January 2, 2020 enter a debit…
- Please finish this problem from part e on: On July 1, 2020 an investor holds 50,000 shares of a certain company stock. The market price at this time is $30 per share. A) what is the current value of investor’s portfolio Value_________ The investor is interested in hedging against movements in the market over the next months (until Sep 2020) and decides to use the September 2020 Mini S&P 500 futures contract. The index futures price is currently 1,500[1] and one contract is for delivery of $50 times the index. B) What is the current value of one Mini S&P 500 futures contract? Value___________ C) The beta of the stock is 1.3. How can investor hedge his portfolio against market risk exposure by trading S&P 500 market index Trading strategy _____ D) The beta of the stock is 1.3. How can investor hedge his portfolio against market risk exposure using futures contract. Should he/she enter LONG or SHORT position. For how many futures contracts? SHORT or…You buy one, Jan 15, 2021 Alphabet Inc. (GOOG) put contract with strike price of $680 and pay a premium of $7. The put contract represents 100 shares of stock. What is the maximum net profit that you could gain from this strategy (be sure to include the cost of the option contract in your calculation)?Sarawat writes a call option on BAR stock with an exercise price of ₱150 per share on October 2022 with an expiration sold for ₱5 on April 2023. What is the gain or loss on the transaction if the price of BAR stock on April 2023 is ₱125? What is the gain or loss on the transaction if the price of BAR stock on April 2023 is ₱175?
- On March 1, 2022, Jensen Corp. purchased a call option on shares of YTV stock. The contract was for 100 shares at a strike price of $120 per share, with an expiration date of May 31, 2022. The option contract premium was $30. On March 31, a market appraisal estimated the time value of the option to be $20. Jensen settled the option contract on May 10. Prices of YTV stock during the option period are provided below. March 1 March 31 May 10 Price of YTV stock: $120 $110 $115 At what amount would Jensen report as the value of the call option in its March 31, 2022 balance sheet? Call option account balance as off March 31 :On January 2, 2020, Jones Company purchases a call option for $300 on Merchant common stock. The call option gives Jones the option to buy 1,000 shares of Merchant at a strike price of $50 per share. The market price of a Merchant share is $50 on January 2, 2020 (the intrinsic value is therefore $0). On March 31, 2020, the market price for Merchant stock is $53 per share, and the time value of the option is $200. Instructions a. Prepare the journal entry to record the purchase of the call option on January 2, 2020. b. Prepare the journal entry(ies) to recognize the change in the fair value of the call option as of March 31, 2020. c. What was the effect on net income of entering into the derivative transaction for the period January 2 to March 31, 2020?Please finish parts d-f On July 1, 2020 an investor holds 50,000 shares of a certaincompany stock. The market price at this time is $30 per share. (a) what is the current value of investor’s portfolio Value_________ The investor is interested in hedging against movements in the market over the next months (until Sep 2020) and decides to use the September 2020 Mini S&P 500 futures contract. The index futures price is currently 1,500 and one contract is for delivery of $50 times the index. (b) What is the current value of one Mini S&P 500futures contract? Value___________ (c) The beta of the stock is 1.3. How can investor hedge his portfolio against market risk exposure by trading S&P 500 market index Trading strategy______ (d) The beta of the stock is 1.3. How can investor hedge his portfolio against market risk exposure using futures contract. Should he/she enter LONG or SHORT position. For how many futures contracts? SHORT or LONG (circle) N…
- On July 1, 2020 an investor holds 50,000 shares of a certaincompany stock. The market price at this time is $30 per share. (a) what is the current value of investor’s portfolio Value_________ The investor is interested in hedging against movements in the market over the next months (until Sep 2020) and decides to use the September 2020 Mini S&P 500 futures contract. The index futures price is currently 1,500 and one contract is for delivery of $50 times the index. (b) What is the current value of one Mini S&P 500futures contract? Value___________ (c) The beta of the stock is 1.3. How can investor hedge his portfolio against market risk exposure by trading S&P 500 market index Trading strategy______ (d) The beta of the stock is 1.3. How can investor hedge his portfolio against market risk exposure using futures contract. Should he/she enter LONG or SHORT position. For how many futures contracts? SHORT or LONG (circle) N contracts________ (e)…Assume that you buy a single stock futures (SSF) of ABC Company with total initial margin of $2,000 in April 2020 to hedge the optential risk. The settlement price on the purchasing day was $4.00. The initial margin of each SSF is $200 while the contract size of the SSF is 1,000 shares of ABC Company. In May 2020, you have close-up the position when the settlement price increases to $4.50. During the period, the balance of your account was below the maintenance margin twice and you were asked to top up $2,000. Identify the return on the invested capital for the futures investment. **The answer provided is 125%. Please provide the steps.Assume that you buy a single stock futures (SSF) of ABC Company with total initial margin of $2,000 in April 2020 to hedge the optential risk. The settlement price on the purchasing day was $4.00. The initial margin of each SSF is $200 while the contract size of the SSF is 1,000 shares of ABC Company. In May 2020, you have close-up the position when the settlement price increases to $4.50. During the period, the balance of your account was below the maintenance margin twice and you were asked to top up $2,000. Identify the return on the invested capital for the futures investment.