Kelsey Tanaka is an investor who buys a 100-share put option for $150. It has an exercise price of $38 and the underlying price per share of the stock at expiration is $39. What is Kelsey’s amount of profit or loss, ignoring brokerage fees?
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Kelsey Tanaka is an investor who buys a 100-share put option for $150. It has an exercise price of $38 and the underlying price per share of the stock at expiration is $39. What is Kelsey’s amount of profit or loss, ignoring brokerage fees?
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- An investor buys a stock for $40 per share and simultaneously sells a call option on the stock with an exercise price of $42 for a premium of $3 per share. Ignoring the dividends and transaction costs, what is the maximum profit the writer of this covered call can earn if the position is held to expiration?Suppose that Tesla stock is currently selling at $270 per share. For each of the following situations (ignoring brokerage commissions), calculate the gain or loss that Olivia Crowe realizes if she makes a 100-share transaction. She sells short and repurchases the borrowed shares at $295 per share. She takes a long position and sells the stock at $295 per share. She sells short and repurchases the borrowed shares at $255 per share. She takes a long position and sells the stock at $255 per share.Let's say I decide to sell 1 call option through an account, but this account will only let me do this if you I already own the stock (a “covered call”), so I buy 500 shares of Company A and then proceed to sell a call option on Company Say this short call option expires in-the-money. What does in-the-money mean in this context? What will I have to do as the seller of this call option if the option expires in-the-money? And what about if it expires out-of-the-money?
- Suppose that an investor buys a 100-share call option for $250. It has an exercise price of $60. The underlying price per share of the stock at expiration is $66. What then is the amount of profit or loss, ignoring brokerage fees?Suppose you own a put option that gives you the right to sell 300 shares of Brad’s Drink to another investor for $28 per share anytime during the next six months. Brad’s Drink stock currently sells for $29 per share. Should you exercise the option if the stock's price increases to $33? What would be your gain (loss) if you bought the stock at $33 and then exercised the option?MetaAn investor buys a put option contract for S of IBM Inc. stock, with a contract size of ton shares. The stock price is currently $35, and the exercise price is $10. What are the investor's expectations, and under what conditions does the investor make a profit? (1) Is this put option in-the-money? ii) Under what circumstances will the option be exercised? (iv) If at the expiration of the option, the stock price is $ so calculate the profit/loss of the investment and explain what the transactions are? Shall the investor exercise this option?
- Lauren has a margin account and deposits $49,994 into it. Assume the prevailing margin requirement is 40%, interest and commisions are ignored, and the Gentry Wine Corporation is selling at $35 per share. a) How many shares can Lauren purchase using the maximum allowable margin? b) What is Lauren's profit (loss) if the price of Gentry's stock 1) rises to $45 and Lauren sells the stock? 2) falls to $25 and Lauren sells the stock? c) If the maintenance margin is 30% to what price can Gentry Wine fall before Lauren will receive a margin call?One of the categories of options available to investors and speculators is LEPOs. Assuming 7.00 per cent margin, what would be the percentage return and dollar profit to an investor who purchased one LEPO (for 1000 shares) for a premium of $26 220 and later closed out the position when the LEPO premium was $28 430?Rachel is considering an investment in Yonan Communications, whose stockcurrently sells for $65. A put option on Yonan’s stock, with an exercise price of $60, has amarket value of $2.90. Meanwhile, a call option on the stock with the same exercise priceand time until expiration has a market value of $9.13. The market believes that at the expirationof the options, the stock price will be $55 or $75 with equal probability.a. What is the premium associated with the put option? The call option?b. If Yonan’s stock price increases to $75, what would be the return to an investor whobought a share of the stock? If the investor bought a call option on the stock? If theinvestor bought a put option on the stock?c. If Yonan’s stock price decreases to $55, what would be the return to an investor whobought a share of the stock? If the investor bought a call option on the stock? If theinvestor bought a put option on the stock?d. If Rachel buys 0.5 share of Yonan Communications and sells one call…
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