A28 At the time of the initiating the contract, the price of a stock is $65. A trader sells 5naked put option contracts on the stock with a strike price of $75 when the optionprice is $5. Today, the options expires today and the stock price is $70. What is thetrader's net profit or loss?Loss of $500Gain of $500Loss of $2,000Loss of $1,500Gain of $2,000Gain of $1,500

The trader has a net loss of $500 because they paid $5 per contract and the stock price is below the…

Answered: At the time of the initiating the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

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
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?
23. At the time of the initiating the contract, the price of a stock is $65. A trader sells 5 naked put option contracts on the stock with a strike price of $75 when the option price is $5. Today, the options expires and the stock price is $70. What is the trader’s net profit or loss?
The price of a stock is $60. A trader sells 1 call option contract (each contract is for 100 options) on the stock with a strike price of $64 when the option price is $10. When does the trader make a net profit? O Only when the stock price is below $74 Only when the stock price is above $74 O Only when the stock price is above $70 Only when the stock price is below $70 O None of these
Investor B sold a put option and bought a call option when the stock price is $30. The strike price for both options is $35. Premiums on call and put is $3.55 and $4.05 respectively. At the time of maturity, the stock is trading at $48. How much B earned as profit? a) $5.40 b) $17.50 c) $18.50 d) $13.50
You purchased five (5) put option contracts on CCC stock with a strike price of $30 and an option price of $0.60. The option expires today when the value of WXX stock is $29.5. Ignoring trading costs and taxes, what is your total profit on your investment? (Note: one contract has 100 options.)
Mr. A bought a put option of 6 months for a price of $50. The strike price is $150. At the end of 6 months, the stock is selling for a price of $180. Calculate the profit/loss from the option. A. Profit of S30 B. Loss of $20 C. Loss of $50 D. Profit of $50
The price of a stock is $64. A trader buys 1 put option contract (each contract is for 100 options) on the stock with a strike price of $60 when the option price is $10. When does the trader make a profit? When the stock price is below $54 O When the stock price is below $60 O When the stock price is below $50 O When the stock price is below $64 ◄ Previous Next ▸
You sold a put contract on EDF stock at an option price of $.25 and an exercise price of $22.50. The option expires today when EDF stock is selling for $21.70 a share. Ignoring transactions costs and taxes, what is your total profit on this investment?
8. Buy one July 170 put contract. Hold it until the option expires. Determine the profits and display the results in a chart (include profits for the following underlying stock prices: 130,140,150,160,170,180,190). Identify the breakeven stock price at expiration. What is the maximum possible gain and loss on the transaction?
This assignment repeats the work done in class using a company named Nodiv. The current share price of Nodiv stock is $50, and it pays no dividends. Thus, the 1-year forward price is 553.00, assuming the risk-free interest rate is 6%.1. Write the payoff in the table from a long futures position where you are obligated to buy at the contract price. Write the payoff in the table from a short futures position where you are obligated to sell at the contract price. Draw the payoff diagram for each position.
The stock price of BAC is currently $150 and a put option with strike price of $150 is $10. A trader goes long 300 shares of BAC stock and long 3 contracts of the put options with strike price of $150. a. What is the maximum potential loss for the trader?[x](sample answer: $105.75)b. When the stock price is $161 on the expiration, what is the trader’s net profit?[y](sample answer: $105.75)

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS