On January 1 2021 you buy shares of an s&p index ETF at $370 each. You are concerned about the possible drop in value of the large cap equities before year end. The S&P 500 currently is at $4,669. You decide to buy an at-the – money put option on the s&p 500 index to insulate your portfolio from a decline in equity prices. Each put ( assume one put per ETF share)is prived at $56 and expires on 31 december. If the s&p is at $4680 on 31 december an dyour ETF position is priced at $468, what is the annualized percent return on entire investment in the ETF, including the put
On January 1 2021 you buy shares of an s&p index ETF at $370 each. You are concerned about the possible drop in value of the large cap equities before year end. The S&P 500 currently is at $4,669. You decide to buy an at-the – money put option on the s&p 500 index to insulate your portfolio from a decline in equity prices. Each put ( assume one put per ETF share)is prived at $56 and expires on 31 december. If the s&p is at $4680 on 31 december an dyour ETF position is priced at $468, what is the annualized percent return on entire investment in the ETF, including the put
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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On January 1 2021 you buy shares of an s&p index ETF at $370 each. You are concerned about the possible drop in value of the large cap equities before year end. The S&P 500 currently is at $4,669. You decide to buy an at-the – money put option on the s&p 500 index to insulate your portfolio from a decline in equity prices. Each put ( assume one put per ETF share)is prived at $56 and expires on 31 december. If the s&p is at $4680 on 31 december an dyour ETF position is priced at $468, what is the annualized percent
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