Label the following for this diagram a. Name of options payoff b. identify whether positive or negative premium identify breakeven point d. What is the profit or loss when stock price is $60 at maturity . Suppose you have this options position, should you exercise your right (if any) assuming that the stock price is S60 at maturity Option Payoffs and Profits Long put $40 $20
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- Label the following for this diagram: a. Name of options payoff b. Identify whether positive or negative premium c. Identify break-even point d. What is the profit or loss when stock price is $60 at maturity e. Suppose you have this options position, should you exercise your right (if any) assuming that the stock price is $60 at maturity? Option Payoffs and Profits Long put $40 $20 $0 Option Payoff Option Profit ---- Exercise Price -$20 -$40 $0 $20 $40 $60 $80 Stock Price At Maturity Payoff and ProfitLabel the following for this diagram: a. Name of options payoff b. Identify whether positive or negative premium c. Identify break-even point d. What is the profitt or loss when stock price is $60 at maturity e. Suppose you have this options position, should you exercise your right (if any) assuming that the stock price is $60 at maturity? Option Payoffs and Profits $40 Long call $20 $0 Option Payoff Option Profit ---- Exercise Price -$20 -$40 $0 $20 $40 $60 $80 Payoff and ProfitLabel the following for this diagram: a. Name of options payoff b. Identify whether positive or negative premium c. Identify break-even point d. What is the profitt or loss when stock price is $60 at maturity e. If you have this option position, should you exercise your right (if any) assuming that the stock price is $60 at maturity? Option Payoffs and Profits $40 $20 $0 Option Payoff Option Profit --- Exercise Price -$20 -$40 $0 $20 $40 $60 $80 Stock Price At Maturity Payoff and Profit
- a. Name of options payoff b. Identify whether positive or negative premium c. Identify break-even point d. What is the profit or loss when stock price is $60 at maturity e. Suppose you have this options position, should you exercise your right (if any) assuming that the stock price is $60 at maturity? Option Payoffs and Profits Long put $40 $20 $0 Option Payoff Option Profit Exercise Price -$20 -$40 $0 $20 $40 $60 $80 Stock Price At Maturity Payoff and ProfitWhats the profit of the "Straddle" when stock price is $15, $20, $25, $30, $35, $40, $45, $50, $55, and $60 respectively? Given: - Stock price = $35.00 - Call option price = $3.00 - Put option price = $2.00 - Exercise Price = $35.00Suppose that put options on a stock with strike prices $30 and $35 cost $4 and $7, respectively. What is the profit of a bull spread when stock price at maturity is above $35? Select one: a. -3 b. 0 C. 32 d. 2 e. 3 €
- Consider the following simplified APT model: Factor Expected Risk Premium Market 6.4% Interest Rate -0.6% Yield Spread 5.1% Factor Risk Exposures Market Interest Rate Yield Spread Stock Stock(b1) (b2) (b3) P 1.0 -2.0 -0.2 P2 1.2 0 0.3 P3 0.3 0.5 1.0 Required: 1. Calculate the expected return for the above stocks. Assume risk free rate is 5%. Consider a portfolio with equal investments in stocks P, P2 and P3 2.What are the factor risk exposures for the portfolio? 3.What is the portfolio’s expected return?Suppose that call options on a stock with strike prices $100 and $106 cost $8 and $5, respectively. How can the options be (the profits from option positions and the total profit).Consider the following simplified APT model: Factor Expected Risk Premium Market 6.4% Interest Rate -0.6% Yield Spread 5.1% Factor Risk Exposures Market Interest Rate Yield Spread Stock Stock (b1) (b2) (b3) P 1.0 -2.0 -0.2 P2 1.2 0 0.3 P3 0.3 0.5 1.0 a) Calculate the expected return for the above stocks. Assume risk free rate is 5%. Consider a portfolio with equal…
- Assume the stock’s future prices of stock A and stock B as the following distribution State Future Price Stock A Future price Stock B 1 $10 $7 2 $8 $9 If the time 1 price of stock A is $6, and the time 1 price of stock B is $5. And C1 represents the time 1 price of claim on state 1, C2 represents the time 1 price of claim on state 2 Use the information about stock prices and payoffs to Find the time 1 price C1 and C2. Find the risk–free rate of return, obtained in this market.Consider two put options on different stocks. The table below reports the relevant information for both options: Put optionTime to maturityCurrent price of underlying stockStrike priceVolatility ( )X1 year$27$1830%Y1 year$25$2030%All else equal, which put option has a lower premium? A.Put option Y B.Put option XII. Suppose you have the following information concerning a particular options.Stock price, S = RM 21Exercise price, K = RM 20Interest rate, r = 0.08Maturity, T = 180 days = 0.5Standard deviation, = 0.5 a. What is correct of the call options using Black-Scholes model? b. Compute the put options price using Black-Scholes model? c. Outline the appropriate arbitrage strategy and graphically prove that the arbitrage is riskless.Note: Use the call and put options prices you have computed in the previous question (a) and (b) above.b. Name the options/stock strategy used to proof the put-call parity. c. What would be the extent of your profit in (a) depend on?