Purchase a one-month put option with a strike price

Assignment Help Financial Management
Reference no: EM13813540

The market price of ZYX stock has been volatile and you expect that volatility to continue for a few weeks based on recent news. Due to this belief you decide to purchase calls and puts to manage your exposure. You purchase a one-month call option with a strike price of $25 and an option price of $1.30. You also purchase a one-month put option with a strike price of $25 and an option price of $0.50. What will be your total profit or loss on these option positions if the stock price is $26.0 on the day the options expire?

A) $100

B)-$180

C)-$80

Reference no: EM13813540

Questions Cloud

Riordan manufacturing : RIORDAN MANUFACTURING
Demand and supply of certain resources in australia : Cost of production- in any industry in Australia where costs of production are an important issue and analyse what is being done in the industry. May be the industry is switching to technology or/and some substitutes have been used to overcome thi..
Maintain safe and healthy workplaces : Explain how each of the following HR practices can be used to maintain safe and healthy workplaces: job analysis, selection, training, performance measurement and feedback, and incentives.
What is most important similarity between jainism vs sikhism : What do you think is the most important similarity and which is the most important difference? Use specifics to support your answer.
Purchase a one-month put option with a strike price : The market price of ZYX stock has been volatile and you expect that volatility to continue for a few weeks based on recent news. Due to this belief you decide to purchase calls and puts to manage your exposure. You also purchase a one-month put optio..
Physical environment for secured databases : Physical Environment for Secured Databases
Disparity in the indian healthcare system : Reflect on quality health outcomes, utilization, and disparity in the Indian healthcare system. India's healthcare infrastructure has not kept pace with the economic development.
What information is the most critical for you to have right : You are the EH&S professional at your company's shipyard. You have just received a call from a production supervisor that there has been a very serious near miss accident out in the assembly area. What information is the most critical for you to ha..
Growth of hospitals and health care systems : "Growth of Hospitals and Health Care Systems with Benefits of Long-Term Care Facilities"  Please respond to the following:

Reviews

Write a Review

Financial Management Questions & Answers

  What is the current value of stock-jewellery market

High Class Jewellery is a specialty company in the fine jewellery market. Based on its latest projections, the company expects to increase its annual dividend by 20 percent per year for the next two years and by 15 percent per year for the following ..

  Compute income taxes owed for a firm

Compute income taxes owed for a firm with the following data:

  Jim roberts is in the personal tax bracket

Jim Roberts is in the 35% personal tax bracket. He is considering investing in FPC bonds that have an interest rate of 9.3%. 2 .a. What is his after-tax yield (interest rate) on the bonds?   2 .b. Suppose Mercy Hospital (a not for profit) is offer..

  Expected interest rate

The real risk-free rate is 2.25%. Inflation is expected to be 2.35% this year, 4% next year, and then 2.75% thereafter. The maturity risk premium is estimated to be 0.05(t - 1)%, where t = number of years to maturity. What is the yield on a 7-year Tr..

  While not a ratings record for the game

The 2012 NCAA Men's final game between Kentucky and Kansas came in at 10.8 / 18.4 . While not a ratings record for the game, industry experts considered it a success. Assume that there are 114 million American households with televisions.

  Refining the target valuation based on new information

Refining the target valuation based on new information uncovered during due diligence is most likely to affect which of the following:

  Zero-coupon bond is trading

Suppose that there are two securities RAIN and SUN. RAIN pays $100 in there is any rain during the next world cup soccer final. SUN pays $100 in there is no rain. Suppose that the world cup soccer final is 1 year from today (although this is not true..

  Purchasing bonds with warrants instead of straight bonds

Pierre Imports recently issued two types of bonds. The first issue consisted of 10-year straight debt with a 9 percent annual coupon. Calculate the implied value of the warrants attached to each bond. Discuss 3 advantages to the investor of purchasin..

  Prepare multiple-step income statement for the current year

Prepare a multiple-step income statement for the current year -  what advantages do you see in this form for the income statement and  compute Shaw's profit margin.

  Depreciated straight-line to zero over its six-year life

Your firm is contemplating the purchase of a new $630,000 computer-based order entry system. The system will be depreciated straight-line to zero over its six-year life. It will be worth $42,000 at the end of that time.

  Growth rate in dividends is expected to be a constant

Great Pumpkin Farms just paid a dividend of $3.40 on its stock. The growth rate in dividends is expected to be a constant 5 percent per year indefinitely. Investors require a return of 13 percent for the first three years, a return of 11 percent for ..

  What is the degree of financial leverage for each plan

Yongman Electronics has decided to invest $10,000,000 in a new headquarters and needs to determine the best way to finance the construction. The firm currently has $50,000,000 of 10 percent bonds and 4,000,000 common shares outstanding. What is the d..

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