Calculates payoffs from buying call

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1. Ms. Smith longs 1 XYZ Feb. 40 Call @ 3 and hold it it to expiration. Suppose no transaction costs, Examine this investment in terms of possible profit or loss. Make a payoff diagram.

2. Ms. Smith writes 10 BETA Jan. 40 put @ 4. The put is exercised when the stock is trading at 38. Ms. Smith immediately sells the stocks in the market. What is Ms. Smiths profit or loss?

3.Ms. Smith writes 10 KLP Dec. 55 call @ 5, uncovered. The call is excersized when the stock is trading at $58. What is Ms. Smiths profit or loss?

4. In Dec. 16 an investor buys 1 ALFA Feb 60 call @ 3 1/2. In January 10th ALFA share closes at $63. What is the intrinsic value of the call? What is its time value?

5. Ms. Smith shorts 1 XYZ Feb. 40 Call @ 3 covered. She purchases XYZ for $30 a share. Assuming no transaction costs, analyze this investment in terms of possible profit or loss. Draw a payoff diagram.

6. Suppose you have the following positions
Long 10 CDE Jan. 50 call @ 3
Long 10 CDE Jan. 50 put @ 4

Analyze this investment in terms of possible profit or loss. Draw a payoff diagram.

 

Reference no: EM1368064

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