Suppose you own a put option that gives you the right to sell 300 shares of Brad’s Drink to another investor for $28 per share anytime during the next six months. Brad’s Drink stock currently sells for $29 per share. Should you exercise the option and sell the stock to the option writer (seller) if the stock price stays at $29 per share? Why?

Q: Assume that you have some shares of stock in ABC Inc. Why do we say that if you also purchase a put…

A: A put option refers to an option contract. The buyer will have the right (but not the obligation) to…

Q: Assume a call option on a particular stock whose current market price is $ 100. The option has a…

A: Strike Price = $100 Price can go up to $110 Price can go down to $90 For a call If Price  = $110 ,…

Q: Stock Z is currently trading at $27 per share. Its three-month call option has a strike price of $33…

A: Current stock price = 27 Strike price of call option = 33 Strike price of put option = 25

Q: You buy call options on J. Milroe Inc Stock. Currently, the stock is priced at $45/share. The call…

A: Profit/loss = payoff- premium paidProfit/loss= Max of (0, spot rate- strike price) - premium paid

Q: Kelsey Tanaka is an investor who buys a 100-share put option for $150.  It has an exercise price of…

A: Option Put Contract size 100 Cost 150 Excise price 38 Expiration price 39 A put option is…

Q: A trader has a put option contract allowing her to sell 100 shares of a stock for a strike price of…

A: Put options are those options that provides the right to the option holders to sell the underlying…

Q: You work in a derivatives section in an investment bank. In August, a customer who holds Texa stock…

A: Put option:- It gives an selling right to an holder not an obligation. to sell a security at a…

Q: Rachel is considering an investment in Yonan Communications, whose stockcurrently sells for $65. A…

A: Compute the current exercise value of put option: The table below shows the Excel formula to…

Q: Portfolio Value If collar is used If you continued to hold the shares Answer is complete but not…

A: In a collar strategy you buy the put option with strike price 60 by paying a premium of $6 and…

Q: e that Sara gets into a short European put option to sell one share of stock Y for $66 that costs $7…

A: A put option is an instrument which provides its holder an option to sell an underlying asset on a…

Q: The stock of Global Consolidated Meganormo Corp. presently sells for $73 per share. You believe that…

A: Put option is a financial market derivate instrument which gives holder the right to sell an asset,…

Q: An investor sells a European Put on a share for $4. The stock price is $47 and the strike price is…

A: Put option is derivative product that derive value from underlying assets and give the option to…

Q: Suppose you own a call option on a stock with a strike price of $20 that expires today. The price of…

A: Call option gives the right to the owner of the option to buy an underlying asset at the price…

Q: c. If Yonan's stock price decreases to $40, what would be the return to an investor who bought a…

A: Question dIf Rachel buys 0.4 share of Yonan Communications and sells one call option on the…

Q: An investor owns a stock that is currently valued at $45.80 a share. She is concerned that the stock…

A: A protective put is strategy where the investor is bullish and already owns a stock, to hedge…

Q: rice of Home Depot stock is trading for $325 per share. You believe the price is too high. If the…

A: When you trade in the stock market than purchase at right price is important because other wise you…

Q: An investor tells their broker to short 1,000 shares of a stock that is currently priced at $50. Is…

A: A trading or investment technique known as short selling makes predictions about the price decline…

Q: what is the maximum profit the writer of this covered call can earn if the position is held to…

A: In a covered call strategy, you buy the underlying stock and at the same time you sell a call option…

Q: The stock price for Chewy is $35. An Investor believes that Chewy stock price will stay in a narrow…

A: An option is an investment strategy that allows a trader to buy or sell an underlying asset or stock…

Q: How would you set up a covered call position on ABC stock that you don't already own?   A. Sell…

A: An option is a contract that offers the buyer the right to buy or sell a particular asset at a…

Q: The market price of a stock is $35.00. An investor has purchased a call option for 100 shares of…

A: Price of underlying asset = $35 Exercise price = $20 Number of shares = 100 Intrinsic value of the…

Q: An investor purchases a call option on ABC stock with a strike price of $50 for a premium of…

A: An option contract offers its buyer to buy or sell the underlying asset at a preset price on a…

Q: You are short a put option and short a call option, both on 1,000 shares of ABC corp, struck at $50.…

A: Number of shares: 1,000Strike price: $50Stock price at expiration: $41.55

Q: Sarah purchases a call of CBA with exercise price $55 and sells a call of CBA with exercise price…

A: Strategy: Buy call option at an exercise price of $55 Sell Call option at an exercise price of $50…

Q: Suppose you own 200 shares in AAPL and would like to protect your position from an unexpected drop…

A: Protective put strategy is the type of option strategy which will be helpful in protecting against…

Q: Say you then decide to sell 1 call option on Company A through your account, but your account will…

A: "In the money" is a term used to describe the status of an option contract in relation to the…

Q: Purchasing Call Options. A call option on lowa stock specifies an exercise price of $70. Today the…

A: Call option is a derivative option which gives a right to its holder to buy an underlying asset at a…

Q: Suppose you own a put option that gives you the right to sell 300 shares of Brad’s Drink to another…

A: An option contract just gives you the right to either buy or sell any stock at a certain price as…

Q: You purchased a put option on M common stock. The option has an exercise price of $49 and M's stock…

A: Introduction:Put option gives the holder the right, but not the obligation to sell a specified…

Q: Explain this step by step: Gerald purchased 3 put option contracts at an option premium of $0.95…

A: Given Information 3 Put option contracts are purchased Option premium = $0.95 1.)Strike Price = $40…

Q: Lumo is a trader at ZNF Equity traders and has just identified a stock, UFSI Limited, which is…

A: Options are derivative contracts. Options could be put options or call options. Both the put and…

Q: You buy a share of Stock A (today) at a price of $50 a share. You intend to hold it for four months.…

A: An investor can reduce the risk of an investment by buying options. A call option gives the investor…

Q: Imagine that you are holding 5,000 shares of stock, currently selling at $40 per share. You are…

A: Note: If Initial outlay is $5,000, buy 5,000 puts and write 5,000 calls:

Q: Suppose the current ABC stock price is $50 and an option trader speculates this price will fall…

A: Options are derivative instruments that are used as hedge investors from potential risks. There are…

Q: Buyer Company bought 100 options of Target Co one year ago and would like to exercise them today.…

A: In an option contract, the dollar profit and loss can be determined by deducting the purchase price…

Q: An investor sells a European call on a share for $4. The stock price is $47 and the strike price is…

A: European call option can be exercised at the time of maturity only. Call option gives the right to…

Q: put option

A: Insurance premium refers to the contract between two parties for securing the life of a person in…

Q: You are an options dealer who deals in non-publicly traded options. One of your clients wants to…

A: To ensure a profit, let's consider the strategy you can employ in this scenario:Buy the put option…

Q: You bought a $50 strike call option on a stock XYZ for $8.20 and then sold/wrote a $65 call option…

A: A premium is paid by the buyer of the option to have the right but not the obligation to exercise…

Q: 23) Dumo is a trader at ZNF Equity traders and has just identified a stock, UFSI Limited, which is…

A: a.Productive put strategy will be employed by the Dumo.As it is a strategy for the management of…