Allen has been investing in the stock market for quite some

Assignment Help Programming Languages

Reference no: EM13383145

Allen has been investing in the stock market for quite some time and had some success with equity investments.Recently, a friend suggested that he start to use options in his portfolio as a means to increase his returns.Allen decided to purchase a March, 2009 expiration call option on Stock X, which carried an exercise price of $500 that was selling for $15.Two weeks later, shares of Stock X were trading for $480.6.Now that the stock price is lower than the purchase price, the options are worthless.However, when Allen waited an additional two weeks, the stock price climbed to $510.Allen, feeling a bit of anxiety, decides to exercise the option and realize some gains.

In exercising this option, what price is Allen getting the stock for?
What is the value at exercise of the option?
Calculate the profit or loss on this transaction.
How might Allen have covered this position to limit his exposure?
How might you use calls like this to increase an investments performance?

Reference no: EM13383145

Questions Cloud

1 discuss your assumptions and beliefs as a leader discuss : 1. discuss your assumptions and beliefs as a leader. discuss how these have changed or evolved while studying business

Outline and critique how samsung has introduced and : outline and critique how samsung has introduced and developed a holistic system of tqm management and customer focused

Evaluate the relationship between strategic reward systems : evaluate the relationship between strategic reward systems and an organizations ability to achieve business

For the most recent year wilson enterprises had sales of : for the most recent year wilson enterprises had sales of 689000 cost of goods sold of 470300 depreciation expense of

Allen has been investing in the stock market for quite some : allen has been investing in the stock market for quite some time and had some success with equity investments.recently

1 discuss which university has the more effective strategyi : 1. discuss which university has the more effective strategy?i. provide example of effective hr planning.ii. what are

Outline and explain the concept of internal marketing and : outline and explain the concept of internal marketing and why it is important in service products. how would you

Perform an internal and external competitive environmental : perform an internal and external competitive environmental scan for your organization. the organizations name is flat

Define and identify the role ofcommunication strategies for : define and identify the role ofcommunication strategies for social health andor issues pr campaigns. briefly consider

User Account

All Pages