Reference no: EM13934507
The common stock of the P.U.T.T. Corporation has been trading in a narrow price range for the past month, and you are convinced it is going to break far out of that range in the next three months. You do not know whether it will go up or down, however. The current price of the stock is $110 per share, the price of a three-month call option with an exercise price of $110 is $9, and a put with the same expiration date and exercise price costs $7.
a. What would be a simple options strategy to exploit your conviction about the stock price’s future movements?
Sell both a put option and a call option on the stock.
Buy both a put option and a call option on the stock.
Buy a put option and sell a call option on the stock.
Sell a put option and buy a call option on the stock.
b. How far would the price have to move in either direction for you to make a profit on your initial investment?
Stock price must move up above $ , or move down below $ for you to make a profit.
|
What property of water gives rise to capillary action
: The antibiotic, polymyxin B, attaches itself to the phospholipids in the bilayers of bacterial cells and increases the permeability of the membrane. What is a likely result that this antibiotic will have on bacterial cells?
|
|
Would it be the availability of credit
: What is tipping theory? how would you apply it to any part of our economy? Most important, where does it start? For instance, if you apply the theory to the auto industry, then what would tip new car purchases? Would it be the availability of credit?..
|
|
Communication and interpersonal skills in clinical practice
: Write a reflective essay on student development in practice and at the university. ‘A reflection, Relating to ...... Communication and interpersonal skills in clinical practice.
|
|
For the list of product manufacturers below
: For the list of product manufacturers below, indicate whether a job-cost system (J) or a process cost system (P) would be most appropriate.
|
|
Make a profit on your initial investment
: The common stock of the P.U.T.T. Corporation has been trading in a narrow price range for the past month, and you are convinced it is going to break far out of that range in the next three months. You do not know whether it will go up or down, howeve..
|
|
What must be the risk-free interest rate
: You buy a share of stock, write a one-year call option with a strike price X = $11, and buy a one-year put option with a strike price X = $11. Your net initial cost to establish the entire portfolio is $10.50. What must be the risk-free interest rate..
|
|
How could you apply the steps of the scientific method
: How does this study apply to the real world? If you were doing the next step in this study, which research question would you develop? How could you test it? How could you apply the steps of the scientific method to test your hypothesis
|
|
Literature review on a specific topic-human sexuality
: Human Sexuality CPY4235 -- Jonathan Oringher, PhD Research/Experiential Reaction Report Assignment You are to write a 4-5 page research report.
|
|
Annual rate of return during the four years
: You make an investment of $8,000 four years ago. Suppose your annual rate of return during the four years was 10%, -5%, 12% and 3% respectively. How much is your total investment worth today?
|