HomeworkLib
Question

When ABC was trading at $52 per share, you paid $6.40 for a call option (for...

When ABC was trading at $52 per share, you paid $6.40 for a call option (for one share) on the stock of ABC with a strike price of $50, and six months until maturity. After six months, the share price of ABC is $54.10. A) What is the value of the call option at expiration? Do not include the $ sign and answer to the nearest $0.01. B) What is your profit or loss? Losses should be entered as negative numbers. Do not include the $ sign and answer to the nearest $0.01.

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Value of Call Option at expiry = Current Price - Strike Price OR 0 whichver is higher

= 54.10 - 50

= 4.10

Value of Option is $ 4.10

Answer b)

The Option holder will exercise the Option since Price is more than the Srike Price.

Loss = Current Price - Strike Price - Premium paid

= 54.10 - 50 - 6.40

= $ -2.3

Loss of $ 2.3

NOTE: The answer to your question has been given below/above. If there is any query regarding the answer, please ask in the comment section. If you find the answer helpful, do upvote. Help us help you.

6 0
Add a comment
Know the answer?
Add Answer to:
When ABC was trading at $52 per share, you paid $6.40 for a call option (for...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • When ABC was trading at $52 per share, you paid $4.20 for a put option (for...

    When ABC was trading at $52 per share, you paid $4.20 for a put option (for one share) on the stock of ABC with a strike price of $50, and six months until maturity. After six months, the share price of ABC is $54.10. A) What is the value of the put option at expiration? Do not include the $ sign and answer to the nearest $0.01. $ B) What is your profit or loss? Losses should be entered as...

  • When ABC was trading at $52 per share, you wrote a put that you sold for...

    When ABC was trading at $52 per share, you wrote a put that you sold for $4.20 (for one share) on the stock of ABC with a strike price of $50, and six months until maturity. After six months, the share price of ABC is $49. What is your profit or loss? Losses should be entered as negative numbers. Do not include the $ sign and answer to the nearest $0.01.

  • Need help on number 19 Thanks. d) Theta -e) Vega 18) Consider the following information regarding a DEF Call option....

    Need help on number 19 Thanks. d) Theta -e) Vega 18) Consider the following information regarding a DEF Call option. Strike price: $115; Current stock price: $112; Continuously compounded riskfree rate: 0 %; Time to expiration: 3 months; Standard deviation of DEF stock: 0.3074; N(D1): 0.4621; N(D2): 0.4017; ABC Beta 1.35; Ln 112/115 -0.0264; Ln 115/112 0.0624; Ln 115/115 0; e^ RT=1.0. Assume you calculate -0.0951 as the value of Di. What is the value of D, for the Black-Scholes...

  • Assume that you have shorted a call option on Intuit stock with a strike price of...

    Assume that you have shorted a call option on Intuit stock with a strike price of $40; when you originally sold (wrote) the option, you received $5. The option will expire in exactly three months' time. a. If the stock is trading at $55 in three months, what will your payoff be? What will your profit be? b. If the stock is trading at $35 in three months, what will your payoff be? What will your profit be? c. Draw...

  • Laverne buys a call option on XOM with a strike price of $90.00. XOM is already...

    Laverne buys a call option on XOM with a strike price of $90.00. XOM is already trading at $91.00 per share. Laverne pays a $1.65 premium on the call, which has a three month expiration. If XOM stock goes up to $103.00 per share and Laverne sells the call at a premium of $12.65, how much total profit will Laverne make on this transaction? $126.50 $12.65 $1,265.00 $1,100.00 Shirley believes that Nike (NKE) stock is going to decline in value...

  • Question 7: Consider a European call option and a European put option on a non dividend-paying...

    Question 7: Consider a European call option and a European put option on a non dividend-paying stock. The price of the stock is $100 and the strike price of both the call and the put is $103, set to expire in 1 year. Given that the price of the European call option is $10.57 and the risk-free rate is 5%, what is the price of the European put option via put-call parity? Question 8: Suppose a trader buys a call...

  • You own a call option on Intuit stock with a strike price of $41. When you...

    You own a call option on Intuit stock with a strike price of $41. When you purchased the option, it cost you $5. The option will expire in exactly three months' time. a. If the stock is trading at $46 in three months, what will be the payoff of the call? What will be the profit of the call? b. If the stock is trading at $36 in three months, what will be the payoff of the call? What will...

  • You purchase a 1-year European call option on ABC stock with strike price 100. The option...

    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?

  • Need help on 20. Thanks 20) in June an investor forms a spread by selling an...

    Need help on 20. Thanks 20) in June an investor forms a spread by selling an ABC 50 Call with September expiration for 52.34/Share, and purchasing an ABC 50 call with December expiration for $3.38/share. The investor plans to close out the time spread position in September at the time of the expiration of the September call option. The Black-Scholes value of an ABC 50 call option with six months until expiration is $1.24/share when ABC stock is trading at...

  • Koka Kola common stock is currently trading for $29 per share. A put option on the...

    Koka Kola common stock is currently trading for $29 per share. A put option on the stock with a strike price of $32 that expires in 334 days is selling for $3.76. A call option on the stock with a strike price of $32 that expires in 334 days is currently trading for $1.99. What is the exercise value of the put option? (Rounded to the nearest cent.) $ What is the put option's time premium? (Rounded to the nearest...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT