Options contracts on the stock with a stock price

Assignment Help Operation Management

Reference no: EM13956141

The price of a stock is $67. A trader sells 5 call options contracts on the stock with a stock price of $64 when the option price is $4. The options are exercised when the stock price is $65. What is the trader's net profit or loss? each contract represents 100 shares.

Reference no: EM13956141

Questions Cloud

One of the most important operating expenses : One of the most important operating expenses for the Olde Virginia Brick Company is natural gas, which is used to bake and dry the bricks. Natural gas prices have recently been quite volatile, now approaching $6 per mcf. If Olde Virginia does not hed..

What is net present value of this project at discount rate : Lakeside Winery is considering expanding its wine-making operations. The new equipment would cost $138,000, would be depreciated on a straight line basis over its 5-year life, and would have a zero value at the end of the 5th year. What is the net pr..

Calculate maximum mortgage amounts for conventional insured : You are considering the purchase of a $125,000 home with data as follows: Borrower data. You would like a fixed-rate, constant-payment 25-year mortgage. You are a VA and are eligible for a VA guaranteed mortgage, however you have used your VA guarant..

The total annual coupon income you will receive : You buy a TIPS at issue at par for $1,000. The bond has a 4.4% coupon. Inflation turns out to be 3.4%, 4.4%, and 5.4% over the next 3 years. The total annual coupon income you will receive in year 3 is _________.

Options contracts on the stock with a stock price : The price of a stock is $67. A trader sells 5 call options contracts on the stock with a stock price of $64 when the option price is $4. The options are exercised when the stock price is $65. What is the trader's net profit or loss? each contract rep..

What is the price of an asian arithmetic average price call : Suppose that S = 100, K = 100, r = 0.06, σ = 0.30, δ = 0, and T = 1.Construct a standard two period binomial stock price three using the method in Chapter 10. Consider the stock price average computed by arithmetically averaging the 6-month and 1-yea..

Find good approximations for at stock price : Suppose stock price S=41, strike K=40, σ=0.3, r=0.06, T=0.5 and δ=0. (1) Computing the Black-Scholes call price. (Note: you may use cumulative normal function N(·) in the expression and detail every step.) (2) Suppose 40.98-strike call priced at 4.56..

Present value model to determine value of the levered firm : An unlevered firm has a value of $850 million. An otherwise identical but levered firm has $50 million in debt at a 7% interest rate. Its cost of debt is 7% and its unlevered cost of equity is 11%. After Year 1, free cash flows and tax savings are ex..

Analyze impact of accounting profit-operating cash flow : Analyze the impact of accounting profit, operating cash flow, net cash flow, and free cash flow concepts on decisions in a non for profit organization.

User Account

All Pages