What will be net profit-loss per share on a short call

Assignment Help Finance Basics
Reference no: EM132525487

On December 21, 2020, you purchased 100 shares of ABC company at $11 per share. You plan to sell your shares on December 21, 2021 and are concerned about downside risk. A put option on ABC stock with an exercise price (K) of $40 is currently priced (P) at $2 per share. Also, two call options on ABC stock with exercise prices (K) of $40 and $65 are priced (C) at $2.5 and $1.50 per share, respectively. All options expire on December 21, 2021. What will be net profit/loss per share on a short call (use K=$40 call) if the stock price is $55 per share?

Reference no: EM132525487

Questions Cloud

What is the company target debt-equity ratio : The company's cost of equity is 18 percent, and its pretax cost of debt is 9 percent. The tax rate is 32 percent. What is the company's target debt-equity ratio
Refunding analysis-mullet technologies : Mullet Technologies is considering whether or not to refund a $200 million, 12% coupon, 30-year bond issue that was sold 5 years ago. It is amortizing $9 millio
What is the effective annual interest rate : What is the effective annual interest rate (EAR) you would get for your investment in the first 10 years?
What is the project equivalent annual cost : A project with a life of 11 has an initial fixed asset investment of $14,700, an initial NWC investment of $1,400, and an annual OCF of -$22,400.
What will be net profit-loss per share on a short call : All options expire on December 21, 2021. What will be net profit/loss per share on a short call (use K=$40 call) if the stock price is $55 per share?
Net profit-loss per share on a long straddle : All options expire on December 21, 2021. What will be net profit/loss per share on a long straddle if the stock price is $10 per share?
What will be net profit-loss per share : On December 21, 2020, you purchased 100 shares of ABC company at $11 per share. You plan to sell your shares on December 21, 2021 and are concerned about
What are the primary objectives of the bankruptcy process : Hostess Brands Inc. grew have contributed to its eventual financial distress? Any personal suggestions would be beneficial here.
What will be net profit-loss per share : All options expire on December 21, 2021. What will be net profit/loss per share on a long put if the stock price is $5 per share?

Reviews

Write a Review

Finance Basics Questions & Answers

  Gaining control over personal finances

What is this ratio and how can it be used when thinking about gaining control over personal finances?

  Total risk rank the following three stocks by their level

total risk rank the following three stocks by their level of total risk highest to lowest. rail haul has an average

  Compare moving average with exponential smoothing forecast

Compare a three-month moving average forecast with an exponential smoothing forecast. Use a = 0.2. Which provides the better forecasts based on MSE?

  Largest institutions acquiring smaller local and regional

Largest institutions acquiring smaller local and regional banks

  Calculate the net present value of projects

Calculate the Net Present Value (NPV) of both projects. Which project should the firm choose based on the NPV criteria? Calculate the Internal Rate of Return (IRR) of both projects. Which project should the firm choose based on the IRR criteria?

  What is the monthly rate of change for property a

a. What is the monthly rate of change for Property A? b. What is the monthly rate of change for Property B?

  What other factors may influence the value of a bond

Is the bond selling at a premium or a discount? Why? Be sure to show how you arrived at your answer. What other factors may influence the value of a bond

  What is the effective rate on loan

The bank quotes a rate of 14% with a required a 22% compensating balance. What is the effective rate on this loan?

  What are the wealth effects of corporate control activities

Why there are higher takeover premiums paid in cash transactions than in stock transactions? How do other security holders fare in takeovers?

  Find the amount of interest earned in the fifth year

Assume that delta t = 1/[10(1 + t)^2] and A(0) = 100. Find the amount of interest earned in the fifth year.

  Calculate the change in working capital

Refer to information provided in the preceding P and complete, in good form, an SCF using the indirect method.

  What amount will eddie calculate for ending inventory

Eddie's Galleria sells billiard tables. The company has the following purchases and sales for 2012.

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