What is the total payoff on two options in your portfolio

Assignment Help Financial Management
Reference no: EM132066935

Consider the following option portfolio. You write a July 2009 expiration call option on IBM with exercise price of $100. You also write a July 2009 expiration put option on IBM with exercise price of $95.

1. If IBM stock is $97 on the expiration date (third Friday of July 2009), what is the total payoff on the two options in your portfolio?

A) 0 B) 2 C) 3 D) 5

SHOW WORK PLEASE

2. If the July 2009 expiration call option price is $7.35 and the July 2009 expiration put option price is $9.00. And the IBM stock is $105 on the expiration date (third Friday of July 2009), what is the total profit/loss on the two options in your portfolio?

A) 7.35 B) 16.35 C) 21.35 D) 11.35 E) None of the Above  

SHOW WORK PLEASE

Reference no: EM132066935

Questions Cloud

Compute delta-gamma-theta approximation for the value : Compute a delta-gamma-theta approximation for the value of the call after 1, 5, and 25 days.
How would matt get joel to support the ideas : Outline the specific information that Matt should collect to build a case for improving customer service at Datatronics. How would Matt get Joel to support his.
Create an essay evaluating the new acquisition processes : Create an essay evaluating the new acquisition processes in DoD Instruction.Analyze the degree DoD 5000.02 creates better clarification.
Find the approximate bond modified duration : Find the approximate bond’s modified duration by using changes in theinterest rate up and down by 5 basis points.
What is the total payoff on two options in your portfolio : If IBM stock is $97 on the expiration date (third Friday of July 2009), what is the total payoff on the two options in your portfolio?
Discuss about the given behaviours : Each of us perceives "ethics" from our own point of reference as to what is or is not ethical. This assignment asks you to consider ethics and whistleblowers.
What is your profit-loss diagram of this protective collar : Next, you buy one contract of the March 2012 $160 puts, which are trading at $4.50. What is your profit/ loss diagram of this protective collar?
The money in six months to buy at-the-money option : What investment today would guarantee that you had the money in 6 months to buy an at-the-money option?
Review problem on capturing and prosecuting the terrorist : In a hostage crises, is it ethical for a government to agree to grant a terrorist immunity if he releases the hostages, even though the government.

Reviews

Write a Review

Financial Management Questions & Answers

  How much interest did sean earn

The interest rate offered on a 5-year certificate of deposit at the National Bank of Emporium is 8.42% compound daily. how much interest did Sean earn?

  Bonds outstanding with coupon rate

Union Local School District has bonds outstanding with a coupon rate of 3.5 percent paid semiannually and 18 years to maturity. The yield to maturity on these bonds is 3.7 percent and the bonds have a par value of $10,000. What is the price of the bo..

  What are comparative levels of investment returns for each

Bonds, also called fixed-income securities, provide investors with successive income over a specific time frame at regular intervals. These securities are issued by a number of companies, municipalities, and government agencies. What are the comparat..

  Liability coverage under business auto policy would cover

Liability coverage under a business auto policy would cover: Select one: a. injuries to a fellow employee caused an employee driving a company car. b. damage to a fellow employee's personal car caused by an employee driving a company car. c. damage t..

  Maximizing profits and minimizing losses

Create a report that includes a discussion and analysis regarding how such a supplier makes such a determination in order to maximize the firm's profits. Include in your response:

  How does the earnings test affect social security benefits

How does the earnings test affect Social Security benefits? How are worker’s compensation rates influenced? How are Social Security, WC and UC financed?

  Advantage of the presidential election campaign check-off

Zachary L. and Cici K. Mao reside at 520 Chestnyt Street, Philadelphia, Pennsylvania 19160. They are both under 65 years old and have one dependent (their son, Oliver, age 4). They do not wish to take advantage of the presidential election campaign c..

  Pure expectation hypothesis holds and market expects

Assume the pure expectation hypothesis holds and the market expects that 1-year rate will be 6.1% 4 years from today (4rt1=6.1%). What is the 4-year rate today (rt4)? Show every step of your calculations.

  Effect of transactions on current position analysis

Effect of Transactions on Current Position Analysis Data pertaining to the current position of Boole Company are as follows:

  How long will it take him to accumulate

Thomas Nguyen currently has $9, 300 in the bank earning interest of 7 percent per year, compounded monthly. If he needs $24, 100 to purchase a car and can save an additional $100 a month stating at the end of this month, how long will it take him to ..

  Determined by the fraction that is invested in market

A portfolio's risk premium and volatility are determined by the fraction that is invested in the market.

  Some examples of the different types of loans out there

What are some examples of the different types of loans out there? What is the difference between them?

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