You bought a call option at strike $ 60 for a price of $ 6 and sold a put option at strike $ 70 for a price of $2.5, both options with the same maturity. The underlying stock currently trade for $61. Your breakeven point is? Group of answer choices 66.50 63.50 61.00 64.50
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You bought a call option at strike $ 60 for a price of $ 6 and sold a put option at strike $ 70 for a price of $2.5, both options with the same maturity. The underlying stock currently trade for $61. Your breakeven point is?
Group of answer choices
66.50
63.50
61.00
64.50
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- In 1973, Fischer Black and Myron Scholes developed the Black-Scholes option pricing model (OPM). (1) What assumptions underlie the OPM? (2) Write out the three equations that constitute the model. (3) According to the OPM, what is the value of a call option with the following characteristics? Stock price = 27.00 Strike price = 25.00 Time to expiration = 6 months = 0.5 years Risk-free rate = 6.0% Stock return standard deviation = 0.49Put–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?Assume a stock is selling for GH¢48.50 with options available at 40, 50, and 60 strike prices.The 50 call option price is at 2.75.a. What is the intrinsic value of the 50 call?b. Is the 50 call in the money?c. Are the 40 and 60 call options in the money?
- Consider a bearish option strategy of buying one $50 strike put for $7, selling two $42 strike puts for $4 each, and buying one $37 put for $2. All options have the same maturity. Colculste the final profic per share of the strategy if the underlying is trading 2t $33 at expiration. 1,51 per share 2.52 per share 3.53 per share 4,54 pershare,Suppose that you sell for 8 dollars a call option with a strike price of 45 dollars, and you sell for 13 dollars each two put options with a strike price of 55 dollars. What is the minimum stock price at the exercise date that will result in you breaking even? Don't use Excel and chatgptparts c, d, e 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?
- Assume that the current price of a stock is S0 = 100. An investor holds long one European put option with a strike price of K = 100 and short one European call option with strike K = 105. Both options mature at the same time T. Assume that the stock price at maturity is ST = 102. What is the payoff to the investor? Select one: a. 2 b. 1 c. 0 d. -1 e. -2 f. None of the aboveparts 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?In an efficient market, a one-year call option on stock S with K = $25 is traded at$7.06, the current stock price S0 = $28.5, the expected market return is 7.5% and the T-Bill yield is 4%. You are about to purchase a one-year put option on the same stock with K = $26, someone offered it to you at a price of $3.6. Should you buy it?
- You use the Black-Scholes-Merton model for a put option on a stock. You calculate N(d1) = 0.60 and N(d2) = 0.56. a) What is the delta of the put option? Solution for A = -0.40 b) You short 100 put options. How would you hedge your delta exposure using the underlying stock? How many shares would you need to buy or sell?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 :)Consider a bearish option strategy of buying one $50 strike put for $7, selling two $42 strike puts for $4 each, and buying one $37 put for $2. All options have the same maturity. Calculate the final profit per share of the strategy if the underlying is trading at $33 at expiration. 1. $1 per share 2. $2 per share 3. $3 per share 4. $4 per share
