What is the effect of an unexpected cash dividend

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Reference no: EM131237118

1. ‘‘If most of the call options on a stock are in the money, it is likely that the stock price has risen rapidly in the last few months.'' Discuss this statement.

2. What is the effect of an unexpected cash dividend on (a) a call option price and (b) a put option price?

3. Options on General Motors stock are on a March, June, September, and December cycle. What options trade on (a) March 1, (b) June 30, and (c) August 5?

4. Explain why the market maker's bid-offer spread represents a real cost to options investors.

5. A United States investor writes five naked call option contracts. The option price is $3.50, the strike price is $60.00, and the stock price is $57.00. What is the initial margin requirement?

Reference no: EM131237118

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