You observe the following quote for a call option on MSFT. The option has a strike price of $255 and expires on June 18, 2021: Bid: $6.14 Ask: $7.06 If you want to buy 9 contracts of the option, how much will you need to pay?
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You observe the following quote for a call option on MSFT. The option has a strike price of $255 and expires on June 18, 2021:
Bid: $6.14
Ask: $7.06
If you want to buy 9 contracts of the option, how much will you need to pay?
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- The speculator buys one put option at a strike price of $70/barrel and expiry date October 2021 for a premium of $1.20/barrel. Consider the following expected payoff chart for buying a put option. What are the names of point A and B? What is the exact value of A? What is the exact value B?You buy one, Jan 15, 2021 Alphabet Inc. (GOOG) put contract with strike price of $680 and pay a premium of $7. The put contract represents 100 shares of stock. What is the maximum net profit that you could gain from this strategy (be sure to include the cost of the option contract in your calculation)?What is the definition of a call option (write it down in words as part of your answer)? Suppose you are the operator of the East Lima International Refinery LLC, and you buy a call option for crude oil to refine in 2022. Your call option has a strike price of $72.42 per barrel, with no option premium, and it expires on September 30, 2022. If the actual price on September 30, 2022 is $73 per barrel, do you exercise the option? Why or why not? Show any work and explain your answer carefully.
- An investor is considering to sell European call options on XYZ Company for $1.50 per option. Curren market price is $17.70 on 6 April 2020, the exercise price is $20, and maturity of each option is 6 months. How many call options should the investor sell to raise a total capital of $1,260,000?Suppose you buy a 100-strike call at a premium of $19.46, sell a 120-strikecall at a premium of $11.26, sell a 100-strike put at a premium of $5.45,and buy a 120-strike put at a premium of $15.68. Assume effective annualrisk-free interest rate of 8.5% and the expiration date of the options is oneyear.(a) Verify that there is no price risk in this transaction.(b) What is the initial cost of the position?(c) What is the value of the position at expiration?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. Suppose the stock price is $152. What is the exercise value?
- You have the following information about LearnMore Inc.’s stock and a two-month call option with a strike price of $140.00. LearnMore Inc.’s current stock price is $100.00. You are using the multiperiod binomial option pricing model to find the value of the two-month option with two periods. ∏u∏u and ∏d∏d values given here apply to any period. Data Collected for LearnMore Inc. u 1.5032 d 0.5922 ∏u∏u 0.2357 ∏d∏d 0.3555 You work with a junior analyst to calculate the value of the option, and she submits her inferences to you. Which of the following points are true in the case of LearnMore Inc.’s stock options? Check all that apply. The option payoff if the stock goes up in two months will be $10.32. The value of the two-month call option with a strike price of $140.00 at the end of two months will be $2.43. The value of the call option will always remain $2.43, irrespective of the time until expiration. LearnMore Inc.’s stock price…You sell a call option on Tesla stock with an exercise price of $150.00. The option expires after one month period as soon as the option premium is $12.00. what is the profit on this option is the stock price $180 at expiration?1. What is the intrinsic and time value for the put option premium with a strike price of $70/barrel and expiry date December 2021? 2. What is the intrinsic and time value for the put option premium with a strike price of $69/barrel and expiry date March 2022?
- The April 2007 expiration put option on AELZ with an exercise price of K95 selling on March 2, 2007 for K4.90 . If AELZ sells at K9090 , what will be the net proceed? If AELZ sells for K88 at expiration, what will be the value of the option at expiration, and how much profit would the investor make?The USDJPY spot price is 115.018 and the one month forward is 115.046. A one month expiration European style call option with a strike price of 115.046 is trading at 4¥ and a put option with the same parameters is trading at 5¥. If we purchase the call and sell the put sketch the payoff of this position at expiry over the range 114.900 to 115.140. If we were going to hedge an exposure to the Yen should we use the option position or the forward? Justify your answer.A one year call option contract of Office Pro sells for $2,200. In one year, the stock price will be either $20 or $30. The exercise price on the call option is $15. What is the current value of the option if the risk-free rate is 8 percent? A.$ 3.48 B.$ 2.78 C.$ 8.11 D.It is impossible to determine with the given information.