Calculate profit on a put option
[DOC File]1 - Purdue University
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a) (5 points) Suppose we play a long straddle by purchasing one 120 call option and one 120 put option at Table 1 and close both positions at Table 2. Calculate the profit or loss AND rate of return. b) (5 points) Suppose that you wait and closed at Table 3 instead. Calculate profit / loss and rate of return.
[DOC File]CHAPTER 1
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The American option must therefore be worth at least as much as its intrinsic value. If it were not an arbitrageur could lock in a sure profit by buying the option and exercising it immediately. Problem 9.15. Explain carefully the difference between writing a put option and buying a call option. Writing a put gives a payoff of .
[DOC File]University of Kansas
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Calculate the profit on the straddle if the spot price of the stock is 55 in one year. (Hint: The price of a put can be found using the Put Call Parity formula.)-9.40 -4.40 -2.40 0.60 2.00 You are given the following yield curve: Term (t) Spot Rate 1 0.060 2 0.065 3 0.069 4 0.072 Calculate the 1 year deferred 3 year forward rate f(1,4).
[DOC File]Use the three tables below to answer the following questions
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(d) 17 Use the Black-Scholes option pricing model to calculate the price of a call option. $5.935. $4.935. $3.935. $2.935. None of the above (a) 18 Calculate the price of the put option. $7.623. $8.623. $9.623. $10.623. None of the above (a) 19 Assume that you have just sold a stock for a …
[DOC File]CHAPTER 24
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2. An American-style option can only be exercised on the expiry date of the option. 3. When an option is used to hedge currency risk, the option will be exercised only if the market price of the underlying item is less favourable than the option strike price. 4. An employee share option is a form of put option.
[DOC File]finpko.ku.edu
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The appropriate risk free bond has a price of $30. Calculate the price of the January put option. a) $11. b) $24. c) $19. d) $30. e) $25 (e) 22 A stock currently trades for $115. January call options with a strike price of $100 sell for $16, and January put options a strike price of $100 sell for $5. ... Profit on put = …
[DOC File]Yola
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A put option with a strike price of 30 costs 1.44. The cost of the straddle is therefore . The profits ignoring the impact of discounting are . Stock Price Range Profit (f) A six-month call option with a strike price of 35 costs 1.85. A six-month put option with a strike price of …
Put Options Under the Spotlight: Benefits and the Danger ...
1.3.6 Profit = Premium received – value of put option. 1.3.7 The maximum profit for the writer of a put option is the premium received which occurs when the put option is not exercised (that is, when the value at expiration = 0). This happens when the value of the underlying at expiration is greater than the exercise price. 1.3.8 The
[DOC File]Use the three tables below to answer the following questions
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a) (5 points) Suppose we play a long straddle by purchasing one 120 call option and one 120 put option at Table 1 and close both positions at Table 2. Calculate the profit or loss AND rate of return. TC: 241 + 268 = 509 TR: 305 + 199 = 504 PROFIT = $5.....5/509 = .98% . b) (5 points) Suppose that you wait and closed at Table 3 instead.
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