Here is a table of call option quotes on Nike (NKE) from CBOT on 2 March 2020 On that day NKE traded at $89.59 The options expire June 19 2020. Bid Strike $7.90 $8.05 $87.50 $6.55 $6.70 $90.00 $5.30 $5.50 $92.50 Suppose that you purchase the $87.50 strike price call and sell the $92.50 strike call. Ignoring commissions, what does your strategy cost today? Recall that these quotes are per share but listed options are written on 100 shares. $300 $240 $275 Ask $225

Here is a table of call option quotes on Nike (NKE) from CBOT on 2 March 2020 On that day NKE traded at $89.59 The options expire June 19 2020. Bid Strike $7.90 $8.05 $87.50 $6.55 $6.70 $90.00 $5.30 $5.50 $92.50 Suppose that you purchase the $87.50 strike price call and sell the $92.50 strike call. Ignoring commissions, what does your strategy cost today? Recall that these quotes are per share but listed options are written on 100 shares. $300 $240 $275 Ask $225

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The following table shows the options quotation in U.S. dollars for Big Walnut Nut Company for June 30 of this year. Option Closing Price Strike Price Calls–Last Quote September Puts–Last Quote September 1 $43.00 $47.00 $2.00 $2.20 2 $43.00 $41.00 $3.00 $1.20 3 $43.00 $49.00 $1.60 $2.60 If you could exercise the options listed only on the expiration date (the third Friday of September), then these options would be ____ options. Assuming that the options listed are American options, on June 30, which of the call options for Big Walnut Nut Company listed in the table is in-the-money? Option 2 Option 1 Option 3
The April 2007 expiration put option on AELZ with an exercise price of K95 selling on March 2, 2007 for K4.90 . If AELZ sells at K9090 , what will be the net proceeds? If AELZ sells for K88 at expiration, what will be the value of the option at expiration, and how much profit would the investor make?
The April 2007 expiration put option on AELZ with an exercise price of K95 selling on March 2, 2007 for K4.90 . If AELZ sells at K9090 , what will be the net proceed? If AELZ sells for K88 at expiration, what will be the value of the option at expiration, and how much profit would the investor make?
Basic Option Strategies Profit Computation Assume the below prices for calls and puts: Call Call Call Put Put Put Strike Jul Aug Oct Jul Aug Oct 165 2.7 5.25 8.1 2.4 4.75 6.75 170 0.8 3.25 6 5.75 7.5 9 Buy one August 170 put contract. Hold it until expiration. Identify the breakeven stock price at expiration. What is the profit/loss if ST=190? Buy one October 165 call contract. Hold it until the options expire. Identify the breakeven stock price at expiration. What is the Maximum possible loss from the transaction? What is the profit/loss if ST=185 Buy 100 shares of stocks and buy one August 165 put contract. Hold the position until expiration. Determine the breakeven stock price at expiration, the maximum profit and the maximum loss. What is the profit/loss if ST=150. Buy 100 shares of stock and write one October 170 call contract. Hold the position until expiration. Determine the breakeven stock price at expiration, the…
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…
Basic Option Strategies Profit Computation Assume the below prices for calls and puts: Call Put Strike Jul Aug Oct Jul Aug Oct 165 2.7 5.25 8.1 2.4 4.75 6.75 170 0.8 3.25 6 5.75 7.5 9 Buy one August 170 put contract. Hold it until expiration. Identify the breakeven stock price at expiration. What is the profit/loss if ST=190? Buy one October 165 call contract. Hold it until the options expire. Identify the breakeven stock price at expiration. What is the Maximum possible loss from the transaction? What is the profit/loss if ST=185 Buy 100 shares of stocks and buy one August 165 put contract. Hold the position until expiration. Determine the breakeven stock price at expiration, the maximum profit and the maximum loss. What is the profit/loss if ST=150. Buy 100 shares of stock and write one October 170 call contract. Hold the position until expiration. Determine the breakeven stock price at expiration, the maximum profit…
Basic Option Strategies Profit Computation Assume the below prices for calls and puts: Call Put Strike Jul Aug Oct Jul Aug Oct 165 2.7 5.25 8.1 2.4 4.75 6.75 170 0.8 3.25 6 5.75 7.5 9 Buy one August 170 put contract. Hold it until expiration. Identify the breakeven stock price at expiration. What is the profit/loss if ST=190? Buy one October 165 call contract. Hold it until the options expire. Identify the breakeven stock price at expiration. What is the Maximum possible loss from the transaction? What is the profit/loss if ST=185 Buy 100 shares of stocks and buy one August 165 put contract. Hold the position until expiration. Determine the breakeven stock price at expiration, the maximum profit and the maximum loss. What is the profit/loss if ST=150. Buy 100 shares of stock and write one October 170 call contract. Hold the position until expiration. Determine the breakeven stock price at expiration, the maximum profit…
A trader bought two July futures contracts. Each contract is for the delivery of 1,000 barrels. The initial margin is $11,250 per contract and the maintenance margin is $9,000. Calculate the daily gain and loss and margin account balance from April 13, 2020 to April 15, 2020 and explain when the investor will receive a margin call and how much does he need to top up?
Assume the below prices for calls and puts: Call Put Strike Jul Aug Oct Jul Aug Oct 165 2.7 5.25 8.1 2.4 4.75 6.75 170 0.8 3.25 6 5.75 7.5 9 Buy one August 170 put contract. Hold it until expiration. Identify the breakeven stock price at expiration. What is the profit/loss if ST=190? Buy one October 165 call contract. Hold it until the options expire. Identify the breakeven stock price at expiration. What is the Maximum possible loss from the transaction? What is the profit/loss if ST=185 Buy 100 shares of stocks and buy one August 165 put contract. Hold the position until expiration. Determine the breakeven stock price at expiration, the maximum profit and the maximum loss. What is the profit/loss if ST=150. Buy 100 shares of stock and write one October 170 call contract. Hold the position until expiration. Determine the breakeven stock price at expiration, the maximum profit and the maximum loss. What is the profit/loss…
On Sept 1, 2020, 2B Co. anticipated the purchase of merchandise from a foreign vendor at a price of $1,000. The purchase would probably occur on Jan 30,2021. On Oct 1,2020, 2B Co. forecasted the sale of merchandise to a foreign customer at a price of $3,000. The sale would probably occur on Mar 31, 2021. On Sept 1, 2020, 2B Co. purchased a 150-day call option to buy $1,000 at an option price of P20 by paying option premium of P200. On Oct 1, 2020, 2B Co. purchased a 180-day put option to sell $3,000 at a strike price of P24 by paying option premium of P300. The company prepares calendar year financial statements. The forecasted purchase and sales transaction occurred on the date anticipated. For the year ended Dec 31, 2021, all foreign currency receivables are collected but only 80% of purchased inventories from the foreign vendor were sold to third person. The following additional data are provided: 9/1/2020 10/1/2020 12/31/2020 1/30/2021 3/31/2021 Buying spot rate P23 P24 P21…
You placed $120,000 in your future trading account have just bought your first HSI June 2023 futures contract today @ 19,652, at market close the HSI June 2023 future closed at 19,534. Currently the initial margin for HSI is $101,944, the maintenance margin is $81,555. HSI futures is $50 per index point. What is you margin account balance as of market closed today? Please write out the detailed calculation steps
Suppose that you purchase the t bill maturing on November 18 2023 for $9993.793. The T bill matures 133 days aftef the settlment date july 9 2023 and has a face value of $10000. What is the T bill asked discount yield?

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