With regard to futures options, how much profit would an investor make if she bought a call option on gold at 8.28 when gold was trading at $484 an ounce, given that the price of gold went up to $537 an ounce by the expiration date on the call? (Note: Assume the call carried a strike price of 480.)
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- Suppose that you enter into a short futures contract to sell July silver for $17.20 per ounce. The size of the contract is 5,000 ounces. The initial margin is $4,000, and the maintenance margin is $3,000.What change in the futures price will lead to a margin call?What happens if you do not meet the margin call?Suppose that you enter into a short futures contract to sell July silver for $27.20 per ounce. The size of the contract is 5,000 ounces. The initial margin is $4,000, and the maintenance margin is $ 3,000. What change in the futures price will lead to a margin call? What happens if you do not meet the margin call? Question 33 options: The price of silver must drop to $27.00 per ounce for there to be a margin call. If the margin call is not met, your broker closes out your position. The price of silver must rise to $27.40 per ounce for there to be a margin call. If the margin call is not met, your broker closes out your position. The price of silver must rise to $27.40 per ounce for there to be a margin call. If the margin call is not met, the position remains open until the margin declines to $0.0. The price of silver must drop to $26.20 per ounce for there to be a margin call. If the margin call is not met, your broker closes out your position. Please answer fast I give you upvote.The futures price of gold is $800. Futures contracts are for 100 ounces of gold, and the margin requirement is $4,000 a contract. The maintenance market requirement is $1,200. You expect the price of gold to rise and enter into a contract to buy gold. How much must you initially remit? Round your answer to the nearest dollar. $ If the futures price of gold rises to $855, what is the profit and return on your position? Round your answer for profit to the nearest dollar and for return to the nearest whole number. Profit: $ Return: % If the futures price of gold declines to $784, what is the loss on the position? Round your answer to the nearest dollar. Enter the answer as a positive value. $ If the futures price declines to $756, what must you do? Round your answer to the nearest dollar. Enter the answer as a positive value. The investor will have to $ to restore the initial $4,000 margin. If the futures price continues to decline to $740, how much do you have in your…
- The current price of gold is $300 per ounce. Carrying costs in total are 0.5% (not including interest) of the gold value payable in 6 months time. If the interest rate is 8%, is there an arbitrage opportunity if the gold futures price for delivery in six months is $310 per ounce? B. If an arbitrage opportunity exists, explain how you would conduct it and calculate the arbitrage profit. C. Why is it not possible in reality to perfectly hedge a portfolio using Options and/or futures Instruments? D. Explain the shortcomings of LTCM’s financial strategy that led to its eventual downfall.A trader owns a commodity that provides no income and has no storage costs as part of a long-term investment portfolio. The trader can buy the commodity for $1250 per ounce and sell it for $1245 per ounce. The trader can borrow funds at 6% per year and invest funds at 3% per year. (Both interest rates are expressed with continuous compounding.) For what range of one-year forward prices does the trader have no arbitrage opportunities? Assume there is no bid–offer spread for forward prices. Between 1245 and 1250 Between 1288 and 1321 Between 1283 and 1327 None of the aboveDonna Doni, CFA, wants to explore potential inefficiencies in the futures market. The TOBEC stock index has a spot value of 185. TOBEC futures contracts are settled in cash and underlying contract values are determined by multiplying $100 times the index value. The current annual risk-free interest rate is 6.0%.a. Calculate the theoretical price of the futures contract expiring six months from now, using the cost-of-carry model. The index pays no dividends.The total (round-trip) transaction cost for trading a futures contract is $15.b. Calculate the lower bound for the price of the futures contract expiring six months from now.
- Consider a 6-months futures contract on gold. We assume no income and that $1 per ounce per 6-months to store gold, with the payment being made at the end of the period. The spot price is $1620 and risk free rate is 2% for all maturities. How can an arbitrageur earn profit is the price of 6-month gold futures is 1630$?I decide to use call options instead of using futures contracts. I purchase 500 ounces of calls. The premium is $90 per ounce for a call expiring in December 2022 with a strike of $1,950. What do I spend in premium, and what is my profit/loss if the spot price of gold is $2,000 per ounce in Dec 2022 when the contract expires? This question is a continuation of question 4. The premium is $90 for a call expiring in December 2022 with a strike of $1,950 per ounce. The premium is $60 for a call expiring in December 2022 with a strike of $2,100 per ounce. I decide to purchase a call with the $1,950 strike and to sell (short) a call with the $2,100 Strike. Complete the following table; include the premium in all payoff calculations. Payoff Payoff Payoff Dec 2022 Long call Short call long call strike=$1,950 and Spot price strike=$1,950…A one-year gold futures contract is selling for $1,247. Spot gold prices are $1,200 and the one-year risk-free rate is 2%. a) According to spot-futures parity, what should be the futures price? b) What risk-free strategy can investors use to take advantage of the futures mispricing, and what would be the profits from that strategy?
- Sixty futures contracts are used to hedge an exposure to the price of silver. Each futurescontract is on 5,000 ounces of silver. At the time the hedge is closed out, the basis is $0.20per ounce. What is the effect of the basis on the hedger’s financial position if (a) the traderis hedging the purchase of silver and (b) the trader is hedging the sale of silver?The one-year futures price on a particular stock - index portfolio is 1,124.91, the stock index currently is 1, 116, the one-year risk-free interest rate is 2.61%, and the year-end dividend that will be paid on a $1,116 investment in the index portfolio is $13.73. By how much is the contract mispriced? future price - parity priceIf you buy a put option on a $100,000 Treasure bond futures contract with an exercise price of 97 and the price of the Treasury bond futures is 130 at expiration, is the contract in the money, out of the money or at the money? What is your profit or loss on the contract if the premium was $5,000? The exercise price and the futures price are quoted in points and each point is $1,000.