"TSLA price is currently at $440. You just bought 5 contracts of at-the-money straddle at strike (K) of $440 and expiry in Dec 2020 for a price of $110. What will be the payoff at expiry to your straddle position if the TSLA price at expiry is (i) $200 (ii) $450 and (iii) $1000 . 1 contract is 100 shares. Answer in integers."

"TSLA price is currently at $440. You just bought 5 contracts of at-the-money straddle at strike (K) of $440 and expiry in Dec 2020 for a price of $110. What will be the payoff at expiry to your straddle position if the TSLA price at expiry is (i) $200 (ii) $450 and (iii) $1000 . 1 contract is 100 shares. Answer in integers."

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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In January 2023 Apple shares are priced at $200 a share. You believe that they are considerably overvalued and are worth only $120 a share. June 2023 put options on a strike price of $210 a share is currently valued at $18 per share. Each put contract is based on 100 shares. (i) What is the intrinsic value of the put option per share? Explain your reasoning. (ii) What is the time value of the put option per share? (iii) If we arrive at expiry in June and you are proved correct with Apple shares selling for $120, what is your total net dollar profit (+) or loss (-) on a single put option contract in dollars bearing in mind the put option is based on a contract of 100 shares? (iv) What will be the total cash settlement by the option writer if the Apple share price expires at $120 per share in June 2023? (v) What is your net dollar profit (+) or loss (-) as a holder of the put contract (based on a contract size of 100 shares) if we arrive at expiry in June and you are wrong and Apple…
The stock of Bedrock Solutions is currently trading at $24.50 per share. The 1-month put option with strike price of 13.50 is currently selling for $2.16. What's the intrinsic value of this put option?
What is the volatility rate? (Use percentage and at least, two decimal places)
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2. A one year long forward contract on a non-dividend-paying stock is entered into when the stock price is $45 and the risk free rate of interest is 10% per annum with continuous compounding a) What are the forward price and initial value of the forward contract? b) Six month later, the price of the stock is $50 and risk-free interest rate is still 10%. What are the forward price and the value of the forward contract?
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You buy 1 put contract with a strike price of $60 on a stock which you own 100 shares. What are the expiration total values for this position (100 stock shares plus 1 put contract) for prices of $50 and $60 if the put premium is $1.80?
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