Option Pricing Suppose a certain stock currently sells for $30 per share. If a put option and a call option are available with $30 exercise prices, which do you think will sell for more? Explain
Q: Suppose you construct a strategy based on options on a stock that is currently selling for $100. The…
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A: Information Provided: Share price = $50 Exercise price = $35 Call price = $10
Q: the following for this diagram: me of options payoff ntify whether positive or negative premium…
A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
Q: Topic: Option Pricing When computing, please do not round off. Only final answers must be rounded…
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Q: Assume the following inputs for a call option: (1) current stock price is $25, (2) strike price is…
A: Here, Current stock price = $25, Strike price = $28, Time to expiration = 4 months, Annualized…
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A: ACCORDING TO BALCK SCHOLES OPTION PRICING MODEL: CALL price =S0×Nd1-k×e-rt×Nd2 where, S0= current…
Q: Suppose that both a call option and a put option have been written on a stock with an exercise price…
A: Exercise price = $40 Current stock price = $42 Call premiums = $3 Put premiums = $0.75
Q: . (Pricing Call Options) Consider a l-period binomial model with R = 1.05, So = 50, u = 1/d = 1.08.…
A: Given, R = 1.05 u = 1.08 d = 1/1.08 = 0.9259 uS = 50 * 1.08 = 54 uD = 50 * 0⋅9259 = 46.30 C+ = uS -…
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Q: Label the following for this diagram a. Name of options payoff b. identify whether positive or…
A: The option held by the option holder is long put. The requirement is only d and e questions.
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A: Since there are several questions, we will answer the first three subparts. Please repost the…
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Q: A call option with a strike price of $100 costs $5. A put option with a strike price of $85 costs…
A: Hi there, thanks for posting the questions. But as per our Q&A guidelines, we must answer the…
Q: You are evaluating a put option based on the following information: P = Ke-#.N(-d,) – S-N(-d,) Stock…
A: The Value of PE should be computed using BSM by using the formula stated below:
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A: Put options are exercised when the market share price is less than the Put price, in which the loss…
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Q: Assume that price of a USDINR call option is quoted as INR 0.25 / 0.27 (bid price / ask price).…
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A: Hello. Since your question has multiple sub-parts, we will solve the first three sub-parts for you.…
Q: What is the put option premium given the following information? What would happen to the Put option…
A: given, Stock Price (S0) $ 28.00 Exercise (Strike) Price (K) $ 35.00 Time to…
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A: A: If put option is purchased, in that case, if the exercise price is greater than the current…
Q: A put option in finance allows you to sell a share of stock at a given price in the future. There…
A: Number of shares purchased =200 Purchasing price= $28, No. of put options bought =65 put options…
Option Pricing Suppose a certain stock currently sells for $30 per share. If a put option and a
call option are available with $30 exercise prices, which do you think will sell for more? Explain
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- Put–Call Parity The current price of a stock is $33, and the annual risk-free rate is 6%. A call option with a strike price of $32 and with 1 year until expiration has a current value of $6.56. What is the value of a put option written on the stock with the same exercise price and expiration date as the call option?Topic: Option Pricing When computing, please do not round off. Only final answers must be rounded off to two decimal places Based on the Black-Scholes model, the price of a put option should be P2,800. If the underlying asset has a strike price of P60,000 and a market price of P58,500, how much is the extrinsic value of the option?You buy a put option on IBM common stock. The option has an exercise price of $136 and IBM’s stock currently trades at $140. The option premium is $5 per contract.a. What is your net profit on the option if IBM’s stock price increases to $150 at expiration of the option and you exercise the option? b. How much of the option premium is due to intrinsic value versus time value?c. What is your net profit if IBM’s stock price decreases to $130?d. Draw the payout diagram at maturity on a short put option position, option premium = $2, and the same exercise price... (Please give the full solution I will upvote)
- Give typing answer with explanation and conclusion You are considering purchasing a put on a stock with a current price of $33. The exercise price is $35, and the price of the corresponding call option is $3.25. According to the put-call parity theorem, if the risk-free rate of interest is 4% and there are 90 days until expiration, the value of the put should be:parts a, b, c Suppose an investor is considering a multi option strategy on a stock with a currentprice of $100. The following strategy is called a strangle. The investor purchases a call optionwith a strike price of $110 for a premium of $5 and purchases a put option with a strike priceof $90 for a premium of $3.a) Draw a payout diagram for the strangle option strategy at expiration.b) Determine the breakeven points for the strangle option strategy.c) Suppose the stock price at expiration is $120. What is the profit for the strangle optionstrategy?d) Suppose the stock price at expiration is $85. What is the profit for the strangle optionstrategy?e) What is the investor speculating on with her option strategy?A one-year call option on a stock with strike price of $90 costs $6 and a one-year put option on the same stock with strike price of $90 costs $7. Suppose that a trader buys one call option and one put option. a. What is the breakeven stock price, above which the trader makes a profit? b. What is the breakeven stock price, below which the trader makes a profit?
- A call option on the stock of Bedrock Boulders has a market price of $7.The stock sells for $30 a share, and the option has a strike price of $25 ashare. What is the exercise value of the call option? What is the option’stime value?Excel Online Structured Activity: Black-Scholes Model Assume the following inputs for a call option: (1) current stock price is $29, (2) strike price is $36, (3) time to expiration is 5 months, (4) annualized risk-free rate is 4%, and (5) variance of stock return is 0.31. Use the Black-Scholes model to find the price for the call option. Do not round intermediate calculations. Round your answer to the nearest cent.Consider Triple Play’s call option with a $25 strike price. The following table contains historical values for this option at different stock prices: Stock Price Call Option Price $25 $ 3.00 30 7.50 35 12.00 40 16.50 45 21.00 50 25.50 Create a table which shows (1) stock price, (2) strike price, (3) exercise value, (4) option price, and (5) the time value.
- A call option on Rosenstein Corporation stock has a market price of $7. Thestock sells for $31 a share, and the option has an exercise price of $25 a share.a. What is the exercise value of the call option?b. What is the premium on the option?Assume that price of a USDINR call option is quoted as INR 0.25 / 0.27 (bid price / ask price). Given this quote, at what price could a company buy the call option?Suppose there is also a 1-year European put option on the same stock as in Question 3 with exercise price $30. The current stock price is also $25 and the stock price, in 1 year, will be either $35 (up by 40%) or $20 (down by 20%). The interest rate is 8%. This stock does not pay dividend. What is the value of the put option? Please use risk neutral probability method and assume discrete discounting. (2) What is put-call parity in option pricing? What needs to be true in order for put-call parity to hold?