Reference no: EM133057225
Consider the following table answer the questions below:
|
Expiration
|
Strike
|
Call
|
Put
|
|
May
|
90.00
|
4.40
|
2.00
|
|
May
|
95.00
|
3.30
|
3.00
|
|
May
|
100.00
|
2.50
|
4.00
|
Current stock price is $92.00.
(1) You are considering a protective put buying. Construct an appropriate protective put buying using puts with X = $90. Make up the profit/loss table and graph the results. Identify and plot the break even stock price. the situExplain ation under which you may consider this strategy.
(2) You are considering a bull spread. Construct an appropriate bull spread using puts with X = $90 and $95. Make up the profit/loss table and graph the results. Identify and plot the break even stock price and the maximum and minimum profits. Explain the situation under which you may consider this strategy.
(3) You are considering a straddle. Construct an appropriate straddle using X = $90 and $95. Make up the profit/loss table and graph the results. Identify and plot the break even stock price and the maximum and minimum profits. Explain the situation under which you may consider this strategy.
(4) You are considering a butterfly spread (or sandwich spread) using PUT options. Construct an appropriate butterfly (sandwich) spread. Make up the profit/loss table and graph the results. Identify and plot the break even stock price and the maximum and minimum profits. Explain the situation under which you may consider this strategy.
(5) You are considering a strategy that holds one stock long; one put long with X = $90; and two calls short with X = $95. Make up the profit loss table and graph the results. Identify and plot the break even stock price and the maximum and minimum profits. Explain the situation under which you may consider this strategy.
(6) You are considering a strategy that holds one call short with X = $90; one put short with X = $90; and two calls short with X = $95. Make up the profit loss table and graph the results. Identify and plot the break even stock price and the maximum and minimum profits. Explain the situation under which you may consider this strategy.