Should the trader take long or short position in the asset

Assignment Help Financial Management
Reference no: EM13950689

A call option on an asset has a delta of 0.3. A trader has sold 3,000 options and wants to create a delta-neutral position.

1. Should the trader take a long or short position in the asset?

2. How many units of the asset should be bought or sold?

Reference no: EM13950689

Questions Cloud

Duties is performed by the clearinghouse : Which of the following duties is performed by the clearinghouse? holding margin deposits negotiating prices between buyers and sellers setting prices for securities lending money to meet margin requirements none of the above
What are the annual net cash flows associated : The management of Casper Company is planning to purchase a new milling machine that will cost $160,000 installed. The old milling machine has been fully depreciated but can be sold for $15,000. The new machine will be depreciated on a straight line b..
How do these students compare to the national sample : Compute a 99 percent confidence interval based on this sample's data. How do these students compare to the national sample?
How many units of the asset should be bought or sold : A call option on an asset has a delta of 0.3. A trader has sold 3,000 options and wants to create a delta-neutral position. Should the trader take a long or short position in the asset? How many units of the asset should be bought or sold?
Should the trader take long or short position in the asset : A call option on an asset has a delta of 0.3. A trader has sold 3,000 options and wants to create a delta-neutral position. Should the trader take a long or short position in the asset? How many units of the asset should be bought or sold?
Calculate value of three-month european put futures option : Calculate the value of a three-month European put futures option when the futures price is $18, the strike price is $20, the risk-free interest rate is 10% per annum, and the volatility of the futures price is 30% per annum.
What do you predict will be the most influential emerging : What do you predict will be the most influential emerging technology for business over the next five years? Why do you think this?
Are you more impressed with the "greatness" of empires : Are you more impressed with the "greatness" of empires or with their destructive and oppressive features? Why? Do you think that the classical empires hold "lessons" for the present, or are contemporary circumstances sufficiently unique to render the..
Alcohol and public health : Need to cover all these topics in the report - Assignment need to be fully plagiarism free and unique. Need to follow all the heading as I have given in descriptions with 1800 words limit no less with 8 to 10 references.

Reviews

Write a Review

Financial Management Questions & Answers

  Comparing two different capital structures

Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Kyle would have 790,000 shares of stock outstanding. Under Plan II, there would be 540,000 shares of stock outstan..

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Evaluating two different silicon wafer milling machines

You are evaluating two different silicon wafer milling machines. The Techron I costs $228,000, has a three-year life, and has pre-tax operating costs of $59,000 per year. The Techron II costs $400,000, has a five-year life, and has pre-tax operating ..

  Your team has been hired as the accountants for the village

your team has been hired as the accountants for the village of aiu. your team is being asked to do the following please

  Bond issue-what is the yield to maturity

Big Rapids Homes has a bond issue outstanding that pays $60 annual coupon paid semi-annually and matures in 30 years. The bonds have a par value of $1,000 and a quoted market price of 95.5. What is the yield to maturity?

  The initial outlay and annual cash flows

A company wishes to select the best of three possible computers, each expected to meet the University's growing need for computational and storage capacity. The initial outlay and annual cash flows over the life of each computer are shown in the foll..

  Evaluating two different silicon wafer milling machines

You are evaluating two different silicon wafer milling machines. The Techron I costs $237,000, has a three-year life, and has pretax operating costs of $62,000 per year If your tax rate is 34 percent and your discount rate is 8 percent, compute the E..

  What is the coupon rate of the bond

Solvent Insurance, Inc issued a 10 year bond 3 years ago. The bonds are currently selling for 95% of par value, with a YTM of 6%. What is the coupon rate of the bond? Please explain!

  What variables must be known in applying the capitalization

What variables must be known (or estimated) in applying the capitalization of cash flow method of valuation to a physical or financial asset?

  What is the cash inflow or outflow from your position

You obtain the following information concerning a stock, a call option, and a put option. What is the cash inflow or outflow from your position? What is profit or loss if the price of the stock stagnates and trades for $42 after three months? What is..

  The bond is currently yielding-payments are made annually

What is the current price of a 20-year 6% coupon bond that has 5 years left until maturity? The bond is currently yielding 8.4%. Payments are made annually.

  Stock with the highest standard deviation of return

The Green Bay Packers are the only publicly owned NFL team. The stock in this team would have a great deal of systematic risk. The stock with the highest standard deviation of return should earn the highest rate of return.

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