Exercise the call option

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Reference no: EM131015586

Please provide calculations on the following quested based on listed options quotations in the Wall Street Journal.

                                                        Call                                 Put

Oracle    Strike          Expir.            Vol.            Last            Vol.            Last

14.26      12.50            Nov             372            2.35           5368            0.50

14.26      15.00             Oct           1852            0.05             532            0.75

14.26      17.50             Mar           1819            1.30               40            4.30

Dated: October 5, 2003

A) If the actual November price of Oracle was $15.00, would you exercise the call option? The put option?

B) Suppose you purchased a call option with a strike price of $30 and paid a premium of $6.What would be your profit or loss if the stock price at expiration is:

a. $10

b. $20

c. $30

d. $40

e. $50

f. $60

g. $100

C) Suppose that instead of purchasing a call option you write a call option.Please repeat number 2.

D) Suppose you purchase a put option with a strike price of $50 and paid a premium of $11.What would be your profit or loss if the stock price at expiration is:

a. $10

b. $20

c. $30

d. $40

e. $50

f. $60

g. $100

E) Suppose that instead of purchasing a put option you write a put option.Please repeat number 4.

F) Suppose you purchase a share of Microsoft stock at $32.10 per share. You are concerned about a price decrease so you write a call option with a strike price of $35 per share for a premium of $4 per share. Calculate your profit or loss if the stock price when the call expires is the following:

a. $19 per share

b. $30 per share

c. $40 per share

d. $45 per share

Assume in all cases that you sell the stock when the call expires at the market price.

G) Assume instead you purchase a put option instead of writing the call. The strike price is $30 per share. The option premium is $4.50 per share. Recompute parts a through d of number 6.

Reference no: EM131015586

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