Consider a stock put option with strike price $152 and time to expiration of 6 months. The current stock price of the underlying is $117. Calculate the new strike price of the option if the firm pays a 8 % stock dividend. (Round your answer to full cents.)
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- Intro A non dividend-paying stock currently trades at $80. You short sell one share of stock, buy a call option and write a put option, both with a strike price of $51. Your immediate cash inflow is $47.84. Both options expire in one year. Part 1 What is the risk-free rate? 3+ decimalsQuestion 6 In January 2024, Amazon shares are priced at $80 a share. You believe that theyare overvalued and are worth only $30 a share. June 2024 put options on a strike priceof $60 a share are currently valued at $5. Each put contract is based on 100 shares.(i) What is the intrinsic value of the put option per share? (ii) What is the time value of the put option per share? (iii) If we arrive at expiry in June and you are proved correct with Amazon shares sellingfor $30, what is your net dollar profit on a single put options contract in dollars bearing inmind the put option is based on a contract of 100 shares?(iv) What is your net dollar profit (+) or loss (-) as a holder of the put contract (based on a contract size of 100 shares) if we arrive at expiry in June and you are wrong and Amazon shares are selling for $100?Question 5: Suppose that a March call option to buy a share for $50 costs $2.50 and is held until March. Under what circumstances will the holder of the 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.Plz explain it
- Question 6 In January 2024, Amazon shares were priced at $80 a share. You believe that they are overvalued and are worth only $30 a share. June 2024 put options on a strike price of $60 a share are currently valued at $5. Each put contract is based on 100 shares. (i) What is the intrinsic value of the put option per share? (ii) What is the time value of the put option per share? (iii) If we arrive at expiry in June and you are proved correct with Amazon shares selling for $30, what is your net dollar profit on a single put options contract in dollars bearing in mind the put option is based on a contract of 100 shares? (iv) What is your net dollar profit (+) or loss (-) as a holder of the put contract (based on a contract size of 100 shares) if we arrive at expiry in June and you are wrong and Amazon shares are selling for $100?Question 5 (20 points) Suppose that a trader writes three naked put option contracts, with each contract being on 1 shares of underlying stock. The option price is $3 on each share, the time to maturity is six months, and the strike price is $60. a. Write out the formula and draw the graph for the trader's profit on each put option on 1 share of stock. ( b. What is the margin requirement for the trader if the current stock price is $58? (5 marks) C. How would the answer to (b) change if the trader is buying instead of writing the options? (5 marksQuestion 9 In January 2023 Apple shares are priced at $200 a share. You believe that they are considerably overvalued and are worth only $120 a share. June 2023 put options on a strike price of $210 a share is currently valued at $18 per share. Each put contract is based on 100 shares. (i) What is the intrinsic value of the put option per share? Explain your reasoning. (ii) What is the time value of the put option per share? (iii) If we arrive at expiry in June and you are proved correct with Apple shares selling for $120, what is your total net dollar profit (+) or loss (-) on a single put option contract in dollars bearing in mind the put option is based on a contract of 100 shares? (iv) What will be the total cash settlement by the option writer if the Apple share price expires at $120 per share in June 2023? (v) What is your net dollar profit (+) or loss (-) as a holder of the put contract (based on a contract size of 100 shares) if we arrive at expiry in June and you are wrong and…
- Question 6 An investor is planning to purchase 7 hundred shares of GHI stock in one month. The stock is currently trading at 104.33. Call options with strike price $116 are available with premium $2.81. Put options with strike price $95 are available with premium $2.51. Expiration of the options matches the exact point in time at which the investor will purchase the shares. The investor hedges the anticipated stock purchase by utilizing the appropriate range-forward hedge with the appropriate number and position in the call and put contracts described above. What is the investor's total cashflow associated with the purchase of stock if the stock price is 96.06 in one month? Your total cashflow answer should include the purchase of stock and any/every cashflow associated with the range-forward hedge.QUESTION 5 Suppose company XYZ's stock is trading at $53.86. You currently hold a put option with a strike price of $69.95 and premium on the option was $14.39. If today is the expiration date, how much did you gain or lose on the option? (Put the answer in as a negative if it's a loss.)stock price is currently $100. you buy a put option with a strike price of $85 and premium $2.50 expiring in 6 months. how high should the stock price be on the expiration day for you to break even on this strategy? a. $102.50 b. $97.50 c. $87.50 d. $82.50
- MF1 Pepsi stock price: $178 Expiration date of options: December 9, 2022 (i.e., 1 month from November 11th) Exercise (or strike) price: $180 Call option value: $2.66 Put option value: $5.35 U.S. Treasury annual yield: 3.71% Question 2 Suppose you currently own Pepsi stock. You wish to do a “covered call” on Pepsi stock to protect against adverse stock price fluctuations. You use the option data shown above. Sketch a profit graph for this covered call. Briefly discuss the advantages of a covered call over just holding Pepsi stock. No calculations necessary, just discussQuestion 1 Options Six months ago you bought for £18 a call option on a stock with an exercise price of £120. If the stock price at expiration of this option is £150, what is your return on investment? A. 167% B. 10% C. 67% D. 8%Question 16 A call option with an exercise price of $40 and four months to expiration sells for $6.78. If the risk-free rate is 1.80% per year (compounded continuously) and the market price of a stock is $45, calculate the price of a put option on this stock $5.24 $5.00 $1.54 $2.50
