←A 6-month call option contract on 100 shares of Home Depot common stock with a strike price of $50.15 can bepurchased for $510. Assuming that the market price of Home Depot stock rises to $65.56 per share by the expirationdate of the option, what is the call holder's profit? What is the holding period return?The profit this option would generate over the 6-month holding period is $1131. (Round to the nearest cent.)

Value of option = (Spot Price - Strike Price) x Number of shares in a contractProfit = Value of…

Answered: A 6-month call option contract on 100…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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An investor sells 10 call options with an exercise price of $35 for a price of $5.00 per each contract. If on the expiration day the underlying asset is trading at $43 per share, what is investor’s gain or loss? $50 gain $30 gain $20 loss $30 loss
A 6-month call option on Meyers Inc.'s stock has a strike price of $45.00 and sells in the market for $8.25. Meyers' current stock price is $51.25. What is the option premium?
A 6-month put option on Smith Corp.'s stock has a strike price of $43.50 and sells in the market for $8.90. Smith's current stock price is $41. What is the option premium?
You purchase one put option contract on AMD with an exercise price of $100 for a premium of $3.7. You hold the option until the expiration date, when AMD sells for $108 per share. One contract is on 100 shares of the underlying stock. Compute your profit. Your Answer: Answer
The cost of a call option on HSB stock with a strike price of $45 is $1.08. The option has 2 months until expiration. You purchase 6 contracts. On the expiration date, the stock was valued at $49.29 a share. What is your profit or loss on the option contracts? Answer should be formatted as a number with 2 decimal places (e.g. 99.99).
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You purchase one put option contract on AMD with an exercise price of $70 for a premium of $2.4. You hold the option until the expiration date, when AMD sells for $78 per share. One contract is on 100 shares of the underlying stock. Compute your profit.
You buy one, Jan 15, 2021 Alphabet Inc. (GOOG) put contract with strike price of $680 and pay a premium of $7. The put contract represents 100 shares of stock. What is the maximum net profit that you could gain from this strategy (be sure to include the cost of the option contract in your calculation)?
Assuming that a September put option to buy a share for $100 costs $4.50 and is held until September. Under what circumstances will the holder of this option make a profit? Under what circumstances will the option be exercised? Draw a diagram showing how the profit on a long position in the option depends on the stock price at the maturity of the option.
1. WRE is currently trading at $120/share. You sold 8 PUT-option contracts on WRE with a strike price of $110 for $8 each. a. What will be your total $ and % gain/loss if WRE price is $130 at the expiration date? b. What will be your total $ and % gain/loss if WRE price is $115 at the expiration date? C. What will be your total $ and % gain/loss if WRE price is $100 at the expiration date?
A one year call option contract of Office Pro sells for $2,200. In one year, the stock price will be either $20 or $30. The exercise price on the call option is $15. What is the current value of the option if the risk-free rate is 8 percent? A.$ 3.48 B.$ 2.78 C.$ 8.11 D.It is impossible to determine with the given information.
a company’s current stock price is $60 per share. Call options for this stock exist that permit the holder to purchase one share at an exercise price of $50. These options will expire at the end of 1 year, at which time the company’s stock will be selling at one of two prices, $45 or $70. The risk-free rate is 7%. what is the call option at the option’s expiration in 1 year ?

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