The price of a stock is $64. A trader buys 1 put option contract on the stock with a strike price of $60 when the option price is $10. When does the trader make a profit? a. When the stock price is below $50 b. When the stock price is below $54 c. When the stock price is below $60 d. When the stock price is below $64
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- The stock price of BAC is currently $120 and a put option with strike price of $120 is $5. A trader goes long 300 shares of BAC stock and long 3 contracts of the put options. a. What is the maximum potential loss for the trader ? b. When the stock price is $140, what is the trader’s net profitA stock price is $30. An investor buys one call option contract on the stock with a strike price of $28 and sells a call option contract on the stock with a strike price of $27. The market prices of the options are $2 and $1.7, respectively. The options have the same maturity date. Describe the investor’s position and the possible gain/loss he will get (taking into account the initial investment). Make a graph of your gain/loss.Suppose a trader buys a stock at $70, buys a put option on the same stock with strike X at a price p=$10 and borrows $80 at r= 0%. For what values of the strike price X will this trader always make money regardless of St
- A stock has a current price of $267. A trader writes 9 naked option contracts on the stock, each contract covering 100 shares. The option price is $2, the strike price is $260, and the time to maturity is 4 months 1. What is the margin requirement if the options are call options (in $)? 2. What is the margin requirement if the options are put options (in $)?An investor purchases a stock for $38 and a put for $.50 with a strike price of $35. The investor sells a call for $.50 with a strike price of $40. What is the maximum profit and loss for this position? Draw the profit and loss diagram for this strategy as a function of the stock price at expiration.a) What is the price of a $35 strike call? Assume S = $38.50, σ = 0.25, r = 0.06, the stock pays no dividend and the option expires in 45 days.b) What is the price of a $60 strike put? Assume S = $63.75, σ = 0.20, r = 0.055, the stock pays no dividend and the option expires in 50 days?c) What is the price of a $25 strike call? Assume S = $23.50, σ = 0.24, r = 0.055, the stock pays a 2.5% continuous dividend and the option expires in 45 days
- a) what is the price of a $35 strike call? Assume S=$38.50, σ =0.25, r=0.06, the stock pays no dividend and the option expires in 45 days. b)what is the price of a $60 strike put? Assume S=$63.75, σ =0.20, r=0.055, the stock pays no dividend and the option expires in 50 days? c) What is the price of a $25 strike call? Assume S=$23.50, σ=0.24, r=0.055, the stock pays a 2.5% continuous dividend and the option expires in 45 days? d) what is the price of a $30 strike put? Assume S=$ 28.50, σ=0.32, r=0.04, the stock pays a 1.0% continuous dividend and the option expires in 110 days? e) what is the delta on a $20 strike call? Assume S=$22.00, σ =0.30, r=0.05, the stock pays a 1.0% continuous dividend and the option expires in 80days1. You buy a call option on a stock for $7 with a strike price of $60. The stock currently sells for $65. The stock goes up to $75. What is your net profit or loss? 2. You sell a put option on a stock for $4 with a strike price of $30. The stock currently sells for $28. If the stock goes up to $35 what is your net profit or loss?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?
- A non – dividend – paying stock with a current price of $52, the strike price is $50, the risk free interest rate is 12% pa, the volatility is 30% pa, and the time to maturity is 3 months? a) Calculate the price of a call option on this stock b) What is the price of a put option price on this stock? c) Is the put-call parity of these options hold?A call option on a stock has a delta of 0.3. A trader has sold 1,000 options. What position such as buy or sell and many shares should the trader take to hedge the position and why?A stock is trading at $46.96 per share, and the 47.5 option is quoted at $5.60 bid and $6.00 ask. The next day the stock is up $2.87 on strong earnings. You see that the option had a theta of -.02 and a delta of .56. Based only on this information, how much extrinsic value should you expect the option's ask price to have? (Answer in dollars per share of option, i.e., 2.87 not 287).