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What is the value of the call option

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  1. You wrote 7 call option contracts on XYZ stock with a strike price of $40 and an option premium of $2.25. What is your net gain or loss on this investment if the price of XYZ is $36.28 on the option expiration date? (Round answer to 2 decimal places. Do not round intermediate calculations).
  2. Three months ago, you purchased a put option on Nole stock with a strike price of $60 and an option price of $0.87. The option expires today when the value of Nole stock is $61.46 Ignoring trading costs and taxes, what is your total profit or loss on your investment? (Round answer to 2 decimal places. Do not round intermediate calculations).
  3. An investor purchases a long call at a price of $3.04. The strike price is $29. If the current stock price is $28.16, what is the break-even price for the investor? (Round answer to 2 decimal places. Do not round intermediate calculations)
  4. The price of Ervin Corp. stock will either be $65 or $87 at the end of the year. Call options are available with one year until expiration. Continuously compounded T-bills currently yield 3.74 %. Suppose the current price of Ervin stock is $73.

What is the value of the call option, using the risk-free approach, if the strike price is $75 per share? (Round answer to 2 decimal places. Do not round intermediate calculations).

Reference no: EM132404506

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