Question

You purchase a European put option on XYZ stock with strike price 50. What is the payoff to the option if XYZ stock is trading at 48 on the expiration day? You purchase a 1-year European call option on ABC stock with strike price 100. The option premium is $10. The effective annual interest rate is 10%, so that 100 dollars lent for 1 year will return 110 dollars. What is the PROFIT if ABC stock is trading at 111 on the expiration day? Suppose XYZ stock is trading at 20, Suppose the effective annual interest rate is 5%, so that 100 dollars lent for 1 year will return 105 dollars. What is a fair 1-year forward price for XYZ stock?

Answer 1

NSWER 1 t Option is basically a Right. Sell, a pahticulch Stock at a Stock falls balow thi Stairu Plaica out of a Option Strat a at ExpihOptim Pamium aid this is not So anore it 50 48