Since, presently the call option is at the money, the profit/loss form the stock will be compensated by loss/profit from the call option payoff.
Hence, investors maximum gain = call option price = $4.
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Question 5 1 pts A 1-week European at-the-money call option on the Apple stock is trading at $4. An investor buys an Ap...
An investor buys a ratio spread of 1-year European calls. He buys 1 call option with strike price 40 and sells 2 call options with strike price 50. Option prices are Strike price Call option premium 40 10 50 5 Determine the investor's profit if the ending price of the underlying stock is (a) 45, (b) 55, (c) 65. (math Finance)
A stock price is $25. An investor buys one put option contract on the stock with a strike price of $24 and sells a put option contract on the stock with a strike price of $22.50. The market prices of the options are $2.12 and$1.95, respectively. The options have the same maturity date. Describe the investor's position and the possible gain/loss he will get (taking into account the initial investment).
A stock is currently trading at $20. Suppose an investor pays $5 for an option with strike $14, maturity one year. What type of option did the investor buy? European call American call European put American put
An investor sells a European call on a share for S3 The stock price is $26 and the strike price is $29. Under what circumstanc 4- es does the investor make a profit? Under what circumstances will the option be exercised? Draw a diagram showing the variation of the investor's profit with the stock price at the maturity of the option.
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...
A trader buys a 1M European call option on a share. The stock price is £108 and the strike price is £97. 1)What is the intrinsic value of this option? 2)How would the intrinsic value change if this were a 9M option? 3) Will this option be exercised at maturity? Why or why not? 4)What is time value and how does it change the price of an option?
1. Apple call options strike $330.00 is trading at $127.50 today. Under what circumstances does the investor of a long call make a profit? Under what circumstances will the option be exercised? Draw a diagram showing the variation of the investors profit with the stock price at the maturity of the option. hint: K = 330 C=127.50 Long call profit: St-K-c>0 , 2. Apple put options strike $460 is trading at $6.35 today. Under what circumstances does the investor make...
1. A covered call (a long stock + a short call) An investor purchases a MCD stock at $35.50 and she immediately shorts a 40 call MCD option. Its option premium is $1.15. Let's create four P&L functions that describe the following trading strategies. Fill all the values and answer simple questions in the Excel template as attached. (Hint: Once you have filled in all the values correctly in the excel file, you can replicate all the plots as in...
Suppose you construct the following European option trades on Apple stock: write a put option with exercise price $32 and premium $2.86, and write a call option with exercise price $32 and premium $3.51. What is your maximum dollar net profit, per share?
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?