Suppose that a trader buys two call options and one put option. A one-year call|option on a stock with a strike price of $36 costs $1.90. A one-year put option onthe stock with a strike price of $36 costs $1.68. What is the breakeven stock pricerounded to the nearest cents , below which the trader makes a profit? Round yourfinal result to the nearest cents and input one number only, without units orpercentage sign [%], using the dot [.] to separate decimals.Your Answer:Answer

Call is in the money when prices go up from strike prices and put is in the money option when prices…

Suppose that a trader buys two call options and one put option. A one-year call option on a stock with a strike price of $36 costs $1.90. A one-year put option on the stock with a strike price of $36 costs $1.68. What is the breakeven stock price ounded to the nearest cents , below which the trader makes a profit? Round your inal result to the nearest cents and input one number only, without units or percentage sign [%], using the dot [.] to separate decimals.

Suppose that a trader buys two call options and one put option. A one-year call option on a stock with a strike price of $36 costs $1.90. A one-year put option on the stock with a strike price of $36 costs $1.68. What is the breakeven stock price ounded to the nearest cents , below which the trader makes a profit? Round your inal result to the nearest cents and input one number only, without units or percentage sign [%], using the dot [.] to separate decimals.

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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You are attempting to value a call option with an exercise price of $108 and one year to expiration. The underlying stock pays no dividends, its current price is $108, and you believe it has a 50% chance of increasing to $136 and a 50% chance of decreasing to $80. The risk-free rate of interest is 10%. Calculate the call option's value using the two-state stock price model. Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. > Answer is complete but not entirely correct. Value of the call option $ 12.73 x
A trader buys a European call for $1. The strike price is $30. Draw a diagram that shows the trader’s variation in profit as a function of the stock price at expiration.
21. If Fincorp stock trades in a dealer market with bid price of 55.25 and asked price of 55.50, a) Suppose you have submitted an order to your broker to buy at market. At what price will your trade be executed? b) Suppose you have submitted an order to sell at market. At what price will your trade be executed? c) Suppose you have submitted a limit order to sell at $55.62. What will happen? d) Suppose you have submitted a limit order to buy at $55.37. What will happen?
Only typing. ...all ques
A butterfly spread is a position in three options on the same underlying stock with different strikes. An investor buys one call with a strike K1 = 22, sells two calls with a strike K2 = 24 and buys one call with a strike K3 = 26. What is the payoff of the butterfly spread, if the stock price equals $26 at maturity?
You write a put with a strike price of $60 on stock that you have shorted at $60 (this is a “covered put”). What are the expiration date profits to this position for stock prices of $50, $55, $60, $65, and $70 if the put premium is $1.80? (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 Put payoff Put profit Net profit $50.00 $55.00 $60.00 $65.00 $70.00
1. What is the fair value for a two-year American put option with a strike price of $85 over a stock which is trading at $86.15 which has a volatility of 37% when the risk free rate is 1.75% using the two step binomial tree? a) What is the delta of this option? b) What is the probability of a down movement in this stock? c) What is the probability of an up movement in this stock? d) What is the proportional move up for this stock e) What is the proportional move down for this stock f) What would be the value of the call option with the same strike price?
You buy a share of stock, write a 1-year call option with X= $85, and buy a 1-year put option with X- $85. Your net outlay to establish the entire portfolio is $83.3. The stock pays no dividends. a. What is the payoff of your portfolio? Payoff b. What must be the risk-free interest rate? (Round your answer to 2 decimal places.) Risk-free rate %
Assume that after one time period, the value of a stock of 80 would be either 120 Or 60. Suppose that, for any y, at a cost of Cy, one can purchase at a time-0 the option to buy y shares of the stock at time-1 at a price of 90 per share. For what values of C, no-arbitrage will be possible? Using the arbitrage theorem, find the value of C for the data given for your group in the above question Derive the first order partial derivative of the Black-Scholes option cost C with respect to r. (FOCUS ONLY OM THE LAST TWO )
A stock priced at $50 has two possible outcomes, either increases to $60 or decreases to $42. If the stock goes up, the payoff of the stock's call option = S5. But, if the stock price declines to $42, the calls will expire worthless. Given these two possible outcomes, what is the Hedge Ratio of the Call option? Round your answer to two decimals. The listed correct answer was 0.28. I could not find a way to get this.
A3)

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