Explain dollar profit per butterfly spread

Assignment Help Finance Basics
Reference no: EM133004023

AMZN is currently trading at $3,148.16. You believe that the price of AMZN will trade between $2,900 and $3,100 over the next month. Based on this belief you buy a Butterfly spread which consists of one long call with strike price $2,900, one long call with strike price $3,100, and two short calls with strike price $3,000. All calls expire a month from today. The premium for the $2,900 call is $57.61. The premium for the $3,000 call is $42.31. The premium for the $3,100 call is $35.16.

What's your dollar profit per butterfly spread if AMZN trades at $3,050.41 a month from today when the options expire?

Reference no: EM133004023

Questions Cloud

Connection between the bopm and risk-neutral valuation : a). Use the BOPM to show that the fair price for the put is around 2.4 and explain the connection between the BOPM and risk-neutral valuation.
Interest in the kitchen equipment versus tom : Scenario Three Kevin is a chef from New Zealand and recently moved to Melbourne. He is keen to open up a Café in Richmond. He finds a great premises to lease on
How many plants does have to sell in order to achieve : Violet would like to earn $2,000 selling plants with ribbons at $8 each. How many plants does she have to sell in order to achieve the goal?
What is the predicted increase in bank deposits : What is the predicted increase in bank deposits or the money supply if there is an initial increase in deposits of $56 million? Reserve requirements are 9.0% an
Explain dollar profit per butterfly spread : What's your dollar profit per butterfly spread if AMZN trades at $3,050.41 a month from today when the options expire?
What upper and lower control limits would use for materials : The management of Golding Company, What upper and lower control limits would you use for materials variances? For labour variances?
What are factors affecting individual saving plans : Explain relevant saving/investment and insurance plans discussed in class. What are factors affecting individual saving plans?
Creating a performance management system : What are the different factors that shouldbe considered when creating a performance management system, and how global differences may impact the way in which pe
Investigate commonwealth bank of australia market efficiency : Please make the following simple and easy to read and please do not go off-topic. Do not give a block of text please make it easy to read and format the calcula

Reviews

Write a Review

Finance Basics Questions & Answers

  Compare the calculated test statistics and critical value

I. Last week, your manager asked you to analyze staffing needs for the Foreclosure Department. She was so impressed, and she wants you to create another report

  Determining the firm accept the project

A firm evaluates all of its projects by applying the IRR rule. If the required return is 14 percent, should the firm accept the following project? For the cash flows in the previous problem, suppose the firm uses the NPV decision rule.

  Optimal capital structure

Toy Corp. is analyzing its optimal capital structure. Currently, Toy's capital structure includes 10% debt and the company is planning to triple (3x) its debt capitalization.

  Shell knob ships cat food throughout the country

Norma's Cat Food of Shell Knob ships cat food throughout the country. Norma has determined that through the establishment of local collection centers around the country, she can speed up the collection of payments by two and one-half days.

  Explain the relationship of mrp with forecasting

Explain the relationship of MRP with forecasting with examples how and why?

  How could should a model reduce the risk

What key question(s) would you want a model(s) to address about this company? How could should a model reduce the risk in the decision making process?

  Analysis of capital structure plans

Examine the following capital structure plans. You will use the EBIT-EPS analysis to evaluate the two plans. One plan is all equity and one has debt and equity.

  What factors should a company consider

What factors should a company consider when it decides whether to invest in a project today or to wait until more information becomes available?

  White waters is estimating its wacc

White Waters is estimating its WACC. The company has collected the following information. What is the company's WACC?

  Which set of projects would maximize shareholder wealth

XYZ Inc. has an overall (composite) WACC of 10%, which reflects the cost of capital for its average asset.

  Which type of security would the firm need to sell

Fortunate Ventures, Inc.'s, common shares are currently selling for $23 a share with 7 million shares outstanding. The firm also has 12,000 bonds outstanding.

  Did osbornes net income as a percent of sales increase

vertical analysis common size percentages for osborne hot dogs sales cost of goods sold and expenses are as

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd