A call option on MSFT (Microsoft) stock has the following terms: exercise/ strike price is $305; expiration date is December 30, 2022; the option premium is $20. The investor holds this option until the expiration date. On the expiration date, MSFT share price is $355. What is the payoff the investor has on the expiration date? Assume each option contract is for 1 Microsoft share. 0000 $50 O SO $30 O $20

A call option on MSFT (Microsoft) stock has the following terms: exercise/ strike price is $305; expiration date is December 30, 2022; the option premium is $20. The investor holds this option until the expiration date. On the expiration date, MSFT share price is $355. What is the payoff the investor has on the expiration date? Assume each option contract is for 1 Microsoft share. 0000 $50 O SO $30 O $20

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A call option (with shares as the underlying asset) was originally purchased for $0.91 and is now trading for $2.62. The exercise price is $35 and the underlying share is currently trading for $37.43. What is the time value of the option? A. $2.43 B. $-1.52 C. $2.62 D. $0.19
A PUT and a CALL option are written on a stock with a strikeprice of $60. The options are held until expiration.1. Calculate the intrinsic value of the PUT option if the stock is currently selling for $75.a) $0b) $15c) -$15d) $57e) 63f) None of the above 2. Calculate the breakeven stock price for the PUT option if the premium is $3. What is the time value of the put?a) $63; $3b) $57; $3c) $55; $0d) $76; $0e) $55; $0f) None of the above 3. Suppose the stock price at expiration is $75. Put premium is $3. The PUT optionWRITER’S profit would be:a) -$3b) $3c) -$15d) $15e) None of the above
You purchase a call option on Stock A with an exercise price of $85 for a premium of $1.9. You hold the option until the expiration date, when Stock A sells for $83 per share. Your profit from the option purchase is ______ per share. (Enter your answer without dollar sign)
A PUT and a CALL option are written on a stock with a strikeprice of $60. The options are held until expiration. 1. Calculate the intrinsic value of the CALL option if the stock is currently selling for$75a) $0b) $15c) -$15d) $57e) 63f) None of the above 2. Calculate the breakeven stock price for the CALL option if the premium is $16. What is the time value of the call?a) $63; $1b) $57; $0c) $76; $16d) $55; $3e) $76; $1f) None of the above 3. Suppose the stock price at expiration is $75. Call premium is $16. The CALL optionWRITER’S profit would be:a) -$3b) $3c) -$15d) $15e) None of the above
A PUT and a CALL option are written on a stock with a strikeprice of $60. The options are held until expiration. Calculate the breakeven stock price for the CALL option if the premium is $16. What is the time value of the call?a) $63; $1b) $57; $0c) $76; $16d) $55; $3e) $76; $1f) None of the above
Q1. You have purchased a call option on Johnson & Johnson common stock. The option has an exercise price of $57.50 and J & J’s stock currently trades at $58.93. The option premium is $2.17 per contract. Calculate your net profit on the option if J & J’s stock price rises to $62.50 and your exercise the option. Calculate your net profit on the option if J & J’s stock price falls to $58.00 and your exercise the option. If J & J’s stock price falls to $58.00 show that it is more profitable to exercise than not exercise the option you have purchased.
Assume a 40 July put option is purchased for GH¢6.50 on a stock selling at GH¢35 per share.If the stock ends up on expiration at GH¢38.75, what will be the value of the put option?
A PUT and a CALL option are written on a stock with a strikeprice of $60. The options are held until expiration Suppose the stock price at expiration is $75. Call premium is $16. The CALL option WRITER’S profit would be:a) -$3b) $3c) -$15d) $15e) None of the above
You purchased a call option on TSLA with an exercise price of $180 for a premium of $5.0 and held it until the expiration date. What is your profit (per share) if the stock sells for $192 on the expiration date? Enter your answer without the dollar sign. Your Answer: Answer
8. Buy one July 170 put contract. Hold it until the option expires. Determine the profits and display the results in a chart (include profits for the following underlying stock prices: 130,140,150,160,170,180,190). Identify the breakeven stock price at expiration. What is the maximum possible gain and loss on the transaction?
Required: Refer to Figure 15.1, which lists the prices of various Microsoft options. Use the data in the figure to calculate the payoff and the profit/loss for investments in each of the following December 2019 expiration options on a single share, assuming that the stock price on the expiration date is $137. (Loss amounts should be indicated by a minus sign. Round "Profit/Loss" to 2 decimal places.) a. Call option, X = 135 b. Put option, X = 135 es c. Call option, X = 145 d. Put option, X = 145 Payoff Profit/Loss
Assuming that a September put option to buy a share for $100 costs $4.50 and is held until September. Under what circumstances will the holder of this 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.

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