Ba short position in a fulures coedracd Csold a forward coetract D. purchased a forwand contracd E. purchased a call option on a futures contract 19. You have taken a stock option position and, if the stock's price deops, you will get a level gain no matter how far peices fall, but you could go bankrupt if the stock's price rises. You have A. bought a call opeion B. bought a put option C. written a call option. D. written a put option. E. written a straddle
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- Suppose you combine two option contracts as follows. You buy a call option on a stock with an exercise price of $65 for a premium of 9$. At the same time you sell a call option on the same stock with an exercise price of $75 for a premium of $4. Both calls expire at the same time. The stock sells currently at $72. Answer the following questions about this investment strategy: 1. Determinethevalueatexpiration(thepayoffs)andtheprofitunderthefollowingoutcomes: a. The price of the stock at expiration is $78b. The price of the stock at expiration is $69c. Thepriceofthestockatexpirationis$62 2. Determine the following:a. The maximum profit b. The maximum loss 3. Determinethebreakevenstockpriceatexpiration(thestockpriceforwhichyourstrategydeliversno profit and no loss). 4. Depictthepayoffandprofitdiagramsofyourinvestmentstrategy.Assume that the current price of a stock is S0 = 100. An investor holds long one European put option with a strike price of K = 100 and short one European call option with strike K = 105. Both options mature at the same time T. Assume that the stock price at maturity is ST = 102. What is the payoff to the investor? Select one: a. 2 b. 1 c. 0 d. -1 e. -2 f. None of the aboveCase:As a speculative investor, you can make profits by combining two option trades. Assume that you expect low volatility for the Delivery Hero share (currently standing at € 104.50). Combine two of the following four possible option trades, all related to Delivery Hero stock:- (1.) Long Call or (2.) Short Call as of 16.12.22, strike price € 105, option price € 5- (3.) Long Put or (4.) Short Put as of 16.12.22, strike price € 104, option price € 4. a) Which two of these four option trades are to be chosen?b) What is the maximum profit of the speculative investor in the example you have chosen?c) At which price or in which price range of the Delivery Hero share is the maximum profit achieved?d) In which price range is the speculative investor at all in the profit zone (i.e. where are the break-even points)?
- At t = 0; the price of a certain stock is S(0) = $50: At t = 1; the price is either S(1) = $80 or S(1) = $30: A certain option contract is worth $10 if the stock price is $80; and is worth $0 if the stock price is $30. Assuming no arbitrage opportunities, and continuously compounded interests of 5%; what is the price of the option at time t = 0? Please solve by hand and show all the steps of answer in order me to understand it at best :)[S1] A put option gives the holder theright to sell a stock or other financialsecurities at a specified price at sometime in the future. [S2] A holder shouldexercise the call option if the marketprice on the expiry date is more thanthe contract price. A. Both are trueB. Both are falseC. S1 is trueD. S2 is trueMr. Eisner sold 10 Microsoft put options and bought 5 Microsoft call options. Both options have the same exercise price of $80 and the same expiration date. Draw the payoff diagram with respect to the price of Microsoft stock at expiration. The solution provided for this question is attched. But I dont understand the payoff for sold put options, if the stock price is less than the strike price then shouldn't the seller would be at loss? why is it given (St-80) and if the stock price is greater than the strike price then shouldnt the seller gain profit? of the premium then why is it given 0? Please explain in simple terms, steo by step.
- You have written a call option on Walmart common stock. The option has an exercise price of $81, and Walmart’s stock currently trades at $79. The option premium is $1.60 per contract. a. How much of the option premium is due to intrinsic value versus time value? b. What is your net profit if Walmart’s stock price decreases to $77 and stays there until the option expires? c. What is your net profit on the option if Walmart’s stock price increases to $87 at expiration of the option and the option holder exercises the option?Stock Z is currently trading at $27 per share. Its three-month call option has a strike price of $33 per share. Z’s three-month put option has a strike price of $25 per share. Which of the following is CORRECT? Investor should not exercise the call option because it is out of the money Investor should exercise the put option because it is in the money Investor should exercise the call option because it is in the money Investor should let both options expire because they are at the moneyCalculate the profit or loss per share of stock to an investor who buys a call option on a stock whose price is K90 but a call option exercise price if K100 if the stock price at expiration is K105. Calculate the profit or loss for a purchaser of a put option with the same exercise price and expiration?
- Which of the following investors would be happy to see the stock price rise sharply?I) An investor who owns the stock and a put option;II) An investor who has sold a put option and bought a call option;III) correct for projects that have average risk compared to the firm's other assets. An investorwho owns the stock and has sold a call optionIV) An investor who has sold a call optionA) I and II onlyB) III and IV onlyC) III onlyD) IV onlyYou would like to be holding a protective put position on the stock of XYZ Co. to lock in a guaranteed minimum value of $100 at year-end. XYZ currently sells for $100. Over the next year the stock price will increase by 10% or decrease by 10%. The T-bill rate is 5%. Unfortunately, no put options are traded on XYZ Co.a. Suppose the desired put option were traded. How much would it cost to purchase?b. What would have been the cost of the protective put portfolio?c. What portfolio position in stock and T-bills will ensure you a payoff equal to the payoff that would be provided by a protective put with X = 100? Show that the payoff to this portfolio and the cost of establishing the portfolio match those of the desired protective put.You are the buyer of a call option which expires today. The call premium is $0.75 and the exercise price is $ 13.50. The underlying stock price is 12.50. What is your profit or loss? Group of answer choices Gain $0.75 Gain $1 Loss $0.75 Loss $0.25 None of the above.