Problem 15-17 Option Strategies (LO3, CFA5) You write a put with a strike price of $30 on stock that you have shorted at $30 (this is a "covered put"). What are the expiration date profits to this position for stock prices of $20, $25, $30, $35, and $40 if the put premium is $1.90? (A negative value should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to 2 decimal places.) Stock price Short profit $ $ $ $ $ 20.00 25.00 30.00 35.00 40.00 Put payoff Put profit Net profit

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Data: S0 = 120; X = 126; 1 + r = 1.05. The two possibilities for ST are 150 and 102. Required: a-1. The range of S is 48 while that of C is 24 across the two states. What is the hedge ratio of the call? Note: Round your answer to 2 decimal places. a-2. Calculate the value of a call option on the stock with an exercise price of 126. (Do not use continuous compounding to calculate the present value of X in this example because we are using a two-state model here; the assumed 5% interest rate is an effective rate per period.) Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

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5 Construct payoff tables or payoff diagrams on expiration to show what position in IBM puts, calls and/or underlying stock best expresses the investor's objectives described below. Assume IBM currently sells for $100. Make appropriate assumptions about the strike prices of options in each case. Ignore the cost of options.   a/ An investor wants the position to be at least worth $75. Further the investor believes that the IBM stock price will go up but will at most reach $140.

Q8: An investor writes three naked put option contracts on a stock. The option price is $8, the strike price is $35, and the stock price is $33. What is the margin requirement for the options?