Suppose the stock price is $152. What is the exercise value? In general, how is the value of a put option affected by time (+/-/None), underlying asset volatility (+/-/None), and the current asset price (+/-/None)?
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Question 4
Consider the following: your purchased a put option on JPM two months ago, with a strike price for the option of $138, and the option expires today. Show work for all parts requiring computation.
- Suppose the stock price is $152. What is the exercise value?
- In general, how is the value of a put option affected by time (+/-/None), underlying asset volatility (+/-/None), and the current asset price (+/-/None)?
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- Question 13 An investor owns a put option with a strike price of $ 20, the premium paid was $ 2. The stock price on the option expiration date is $ 25, which is the below statements is correct? A ) The loss on the option is$7 B The option should be allowed to lapse C The intrinsic value of the option is - $2 D The profit on the option is $ 3Question 5: Suppose that a March call option to buy a share for $50 costs $2.50 and is held until March. Under what circumstances will the holder of the option make a profit? Under what circumstances will the option be exercised? Draw a diagram showing how the profit on a long position in the option depends on the stock price at the maturity of the option.Plz explain ita) You've entered into a long forward. The forward has 1.25 years to expiration. The continuouslycompounded risk-free rate of interest is 3.5%. The forward price is $83.50. The underlying assetprice is $81.70. Show whether the forward contract is your asset or liability. b)Suppose that both a call option and a put option have been written on a stock with an exerciseprice of $40. The current stock price is $42, and the call and put premiums are $3 and $0.75,respectively. Draw fully labelled profit diagrams of a long call and a short put. c)For the same call and put options as in question (a), calculate the profit to positions of both theshort call and the long put with an expiration day stock price of $43.
- 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?Give typing answer with explanation and conclusion to all parts Consider a put option whose underlying asset is a stock index with 6 months to expiration and a strike price of $1000. Suppose the risk-free interest rate for the six months is 2% and that the option’s premium is $74.20. (a) Find the future premium value in six months. (b) What is the buyer’s profit is the index spot price is $1100? (c) What is the buyer’s profit is the index spot price is $900An investor owns a put option with a strike price of $ 20, the premium paid was $ 2.The stock price on the option expiration date is $ 25, which is the below statements is correct? The intrinsic value of the option is-$2 The loss on the option is $ 7 The option should be allowed to lapse The profit on the option is $ 3
- 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 :)You obtain the following information concerning a stock and a put option Price of the stock $42 Strike price $40 Price of the put $3 Expiration date three months You want to purchase the stock but also want to use an option to reduce your risk of loss. a) What is the cash inflow or outflow from your position when you purchase your put option? c) What is the total profit or loss if the price of the stock stagnates and trades for $42 after three months? d) What is the total profit or loss if the price of the stock trades for $50 after three months? e) What is the total profit or loss if the price of the stock trades for $30 after three months?H2. Using the Black-Scholes model (BSOPM), compute the standard deviation that is implied by the following call option data as: the time to the option's maturity is 0.25 years, the price of the underlying option asset is RM30, the continuously compounded risk-free interest rate is 0.12. the exercise or striking price is RM30, and the cost or premium of the call is RM1.90.
- 3. A stock sells for $110. A call option on the stock has an exercise price of $105 and expires in 43 days. If the interest rate is 0.11 and the standard deviation of the stock’s return is 0.25. a) Calculate the call using the Black-Scholes model b) What would be the price of a put with an exercise price of $140 and the same time until expiration? c) How does an increase in the volatility and interest rate changes affect the underlying stock’s return on an option’s value? Explain.1. Three months ago an investment company bought for £8 a call option on a stock with an exercise price of £136. If the stock price at expiration of this option is £147. Select which of the following best describes the option value, the decision of the Investment Company and the return on investment thereon. A. Option value Decision Profit / (loss) % Exercise price – Stock price Exercise 37.5% B. Option value Decision Profit / (loss) % Stock price – Exercise price Don’t Exercise 2.2% C. Option value Decision Profit / (loss) % Exercise price – Stock price Exercise 2.2% D. Option value…Problem 4c: State whether the following statements are true or false. In each case, provide a brief explanation. c. An investor would like to purchase a European call option on an underlying stock index with a strike price of 210 and a time to maturity of 3 months, but this option is not actively traded. However, two otherwise identical call options are traded with strike prices of 200 and 220 respectively, hence the investor can replicate a call with a strike price of 210 by holding a static position in the two traded calls.