Portfolio of options and stock-construct the profit profile

Assignment Help Financial Management

Reference no: EM13806763

Given the following portfolio of options and stock, construct the profit profile.

Short 400 shares of IBM @ $100

Buy 2 June 95 Calls options @ $8.25

Sell 1 June 100 Put option @ $2.25

Sell 1 June 105 Put @ $6.10

Reference no: EM13806763

Questions Cloud

Capital allocation line-different borrowing-lending rates : You manage a risky portfolio with expected rate of return of 18% and standard deviation of 28%. The T-bill rate (lending rate) is 8% and borrowing rate is 10%. Your client’s degree of risk aversion is A = 3.5. Calculate the Sharpe-Ratio (reward-to-va..

What are the parameters that the value of an option depends : What are the parameters that the value of an option depends upon and how would a rise in each of these parameters affect the price of a put and call?

What is the implied interest rate : You have been given that a 6-month 100 Call option on XYZ stock is trading at $4.25. A put with the same strike price and expiration is trading @ $1.25. If the current price of the sock is 102, what is the implied interest rate?

Depreciations each year using straight line depreciation : A wood products company has decided to purchase new logging equipment for $100,000. The new equipment will be kept for 10 years before being sold. Its estimated SV at the time is expected to be $10,000. What is the depreciations each year using strai..

Portfolio of options and stock-construct the profit profile : Given the following portfolio of options and stock, construct the profit profile.

What is payback period-expected remaining life of the cart : It will cost $3,500 to acquire a small hot dog cart. Cart sales are expected to be $1,500 a year for three years. After the three years, the cart is expected to be worthless as that is the expected remaining life of the cart. What is the payback peri..

Advantages and disadvantages to using a traditional IRA : Discuss the advantages and disadvantages to using a traditional IRA, including when it may be advantageous to use a non deductible IRA

International owned depreciable plant assets : On July 1 of the current year, Melissa Co. acquired 25% of the outstanding shares of common stock of International Co. at a total cost of $700,000. The underlying equity (net assets) of the stock acquired by Melissa was only $600,000. Compute the tot..

What are the companys days sales in receivables : A company has net income of $183,000, a profit margin of 7.7 percent, and an accounts receivable balance of $122,370. Assuming 80 percent of sales are on credit, what are the company’s day’s sales in receivables?

User Account

All Pages