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ssume you purchased the right to sell 2,000 shares of Target stock in February 2022 at a strike price of $240 per share. Suppose Target stock sells for $212 per share immediately before your options’ expiration. What is the rate of return on your investment? What is your rate of return if the stock sells for $268 per share (think about it)? Assume your holding period for this investment is exactly three months. Note: A negaive value should be indicated by a minus sign. Do not round intermediate calculations. Enter your 3-month returns as a percent rounded to 2 d

ssume you purchased the right to sell 2,000 shares of Target stock in February 2022 at a strike price of $240 per share. Suppose Target stock sells for $212 per share immediately before your options’ expiration. What is the rate of return on your investment? What is your rate of return if the stock sells for $268 per share (think about it)? Assume your holding period for this investment is exactly three months. Note: A negaive value should be indicated by a minus sign. Do not round intermediate calculations. Enter your 3-month returns as a percent rounded to 2 d

Essentials Of Investments
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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Assume you purchased the right to sell 2,000 shares of Target stock in February 2022 at a strike price of $240 per share. Suppose Target stock sells for $212 per share immediately before your options’ expiration. What is the rate of return on your investment? What is your rate of return if the stock sells for $268 per share (think about it)? Assume your holding period for this investment is exactly three months.

 

Note: A negaive value should be indicated by a minus sign. Do not round intermediate calculations. Enter your 3-month returns as a percent rounded to 2 decimal places.

TGT US Equity 95) Actions 96) Export. 97) Settings. TARGET CORP -5.845 216.12 Strikes Center Calc Mode ID Center Strike Calls/Puts 83 Calls 1215.875 5 Exp 21-Jan-22 DTGT 1/21/22 C210 2) TGT 1/21/22 C212.5 Ticker Bid 21-Jan-22 (0d); CSize 100; R .26; IFwd 216.06 5.80 3.65 1.77 56 15 3) TGT 1/21/22 C215 4 TGT 1/21/22 C217.5 5) TGT 1/21/22 C220 10 Puts Calls 10.00 4.60 1.76 .62 Ask 7.40 6.10 2.28 .89 .26 -2.6362% Exch US Composite As of 19 Term Structure 21.60 13.80 8.65 5.15 2.95 18-Feb-22 (28d); CSize 100; IDiv .78 USD; R .26; IFwd 215.32 TGT 2/18/22 C200 17.55 20.00 7) TGT 2/18/22 C210 10.25 4.90 TGT 2/18/22 C220 TGT 2/18/22 C230 100 TGT 2/18/22 C240 1.96 .73 Last 21-Jan-2022 7.35 6.65y 2.10 80 21 28.50y 10.80 18-Mar-22 (56d); CSize 100; IDiv .78 USD; R.26; IFwd 215.36 10) TGT 3/18/22 C200 20.15 12 TGT 3/18/22 C210 13.45 13) TGT 3/18/22 C220 8.35 14 TGT 3/18/22 C230 4.85 15) TGT 3/18/22 C240 2.70 5.15 1.98 72 215.82/215.99 29.00y 14.25 9.65 5.10 2.85 Moneyness IVM 118.18 130.35 66.42 64.54 60.19 37.18 29,19 27.75 27.49 28.22 35.07 32.58 31.34 31.07 31.08 Volm Hi 220.34 92) 03/02/22 E | ERN >> Strike Lo 215.76 Ticker Bid 21-Jan-22 (0d); CSize 100; R .26; IFwd 216.06 4210.00 50 TGT 1/21/22 P210 .18 .44 212.50 52 TGT 1/21/22 P212.5 5215.00 530 TGT 1/21/22 P215 77217.50 50 TGT 1/21/22 P217.5 62 220.00 55) TGT 1/21/22 P220 5- Puts .89 1.96 3.90 Volm 717042 Ask 31 .59 1.22 2.46 4.55 2.20 4.75 9.55 16.90 25.95 Last 18-Feb-22 (28d); CSize 100; IDiv .78 USD; R .26; IFwd 215.32 200.00 56 TGT 2/18/22 P200 10 210.00 57) TGT 2/18/22 P210 2.10 4.45 9.15 62 220.00 58 TGT 2/18/22 P220 79 230.00 59 TGT 2/18/22 P230 102 240.00 600) TGT 2/18/22 P240 .30 .50 1.00 2.30 4.00 5.15 8.50 13.45 19.80 27.80 2.10 4.60 9.40 16.30 23.85 18-Mar-22 (56d); CSize 100; IDiv .78 USD; R.26; IFwd 215.36 200.00 61) TGT 3/18/22 P200 16 210.006) TGT 3/18/22 P210 5.00 8.30 12.85 20 220.00 63) TGT 3/18/22 P220 35 230.00 60 TGT 3/18/22 P230 19.15 16 240.00 65) TGT 3/18/22 P240 26.05 16.37 23.78 4.95 8.35 12.55 18.49 25.83 Option Monitor HV 25.09 IVM 87.48 77.91 63.96 60.30 56.40 32.04 29.45 27.52 27.01 16.79 34.16 32.35 31.34 30.06 28.44 Volm 58 36 202 86 149 44 462 34 28 20 18 38 6 9 5
Transcribed Image Text:TGT US Equity 95) Actions 96) Export. 97) Settings. TARGET CORP -5.845 216.12 Strikes Center Calc Mode ID Center Strike Calls/Puts 83 Calls 1215.875 5 Exp 21-Jan-22 DTGT 1/21/22 C210 2) TGT 1/21/22 C212.5 Ticker Bid 21-Jan-22 (0d); CSize 100; R .26; IFwd 216.06 5.80 3.65 1.77 56 15 3) TGT 1/21/22 C215 4 TGT 1/21/22 C217.5 5) TGT 1/21/22 C220 10 Puts Calls 10.00 4.60 1.76 .62 Ask 7.40 6.10 2.28 .89 .26 -2.6362% Exch US Composite As of 19 Term Structure 21.60 13.80 8.65 5.15 2.95 18-Feb-22 (28d); CSize 100; IDiv .78 USD; R .26; IFwd 215.32 TGT 2/18/22 C200 17.55 20.00 7) TGT 2/18/22 C210 10.25 4.90 TGT 2/18/22 C220 TGT 2/18/22 C230 100 TGT 2/18/22 C240 1.96 .73 Last 21-Jan-2022 7.35 6.65y 2.10 80 21 28.50y 10.80 18-Mar-22 (56d); CSize 100; IDiv .78 USD; R.26; IFwd 215.36 10) TGT 3/18/22 C200 20.15 12 TGT 3/18/22 C210 13.45 13) TGT 3/18/22 C220 8.35 14 TGT 3/18/22 C230 4.85 15) TGT 3/18/22 C240 2.70 5.15 1.98 72 215.82/215.99 29.00y 14.25 9.65 5.10 2.85 Moneyness IVM 118.18 130.35 66.42 64.54 60.19 37.18 29,19 27.75 27.49 28.22 35.07 32.58 31.34 31.07 31.08 Volm Hi 220.34 92) 03/02/22 E | ERN >> Strike Lo 215.76 Ticker Bid 21-Jan-22 (0d); CSize 100; R .26; IFwd 216.06 4210.00 50 TGT 1/21/22 P210 .18 .44 212.50 52 TGT 1/21/22 P212.5 5215.00 530 TGT 1/21/22 P215 77217.50 50 TGT 1/21/22 P217.5 62 220.00 55) TGT 1/21/22 P220 5- Puts .89 1.96 3.90 Volm 717042 Ask 31 .59 1.22 2.46 4.55 2.20 4.75 9.55 16.90 25.95 Last 18-Feb-22 (28d); CSize 100; IDiv .78 USD; R .26; IFwd 215.32 200.00 56 TGT 2/18/22 P200 10 210.00 57) TGT 2/18/22 P210 2.10 4.45 9.15 62 220.00 58 TGT 2/18/22 P220 79 230.00 59 TGT 2/18/22 P230 102 240.00 600) TGT 2/18/22 P240 .30 .50 1.00 2.30 4.00 5.15 8.50 13.45 19.80 27.80 2.10 4.60 9.40 16.30 23.85 18-Mar-22 (56d); CSize 100; IDiv .78 USD; R.26; IFwd 215.36 200.00 61) TGT 3/18/22 P200 16 210.006) TGT 3/18/22 P210 5.00 8.30 12.85 20 220.00 63) TGT 3/18/22 P220 35 230.00 60 TGT 3/18/22 P230 19.15 16 240.00 65) TGT 3/18/22 P240 26.05 16.37 23.78 4.95 8.35 12.55 18.49 25.83 Option Monitor HV 25.09 IVM 87.48 77.91 63.96 60.30 56.40 32.04 29.45 27.52 27.01 16.79 34.16 32.35 31.34 30.06 28.44 Volm 58 36 202 86 149 44 462 34 28 20 18 38 6 9 5
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