UG’s stock price is $53 and its put price is $4.50 for a strike price of $55. Then this put option’s intrinsic

Suppose you combine two option contracts as follows. You buy a call option on a stock with an exercise price of $65 for a premium of 9$. At the same time you sell a call option on the same stock with an exercise price of $75 for a premium of $4. Both calls expire at the same time. The stock sells currently at $72. Answer the following questions about this investment strategy: 1. Determinethevalueatexpiration(thepayoffs)andtheprofitunderthefollowingoutcomes: a. The price of the stock at expiration is $78b. The price of the stock at expiration is $69c. Thepriceofthestockatexpirationis$62 2. Determine the following:a. The maximum profit b. The maximum loss 3. Determinethebreakevenstockpriceatexpiration(thestockpriceforwhichyourstrategydeliversno profit and no loss). 4. Depictthepayoffandprofitdiagramsofyourinvestmentstrategy.

The current market price of a share of a stock is $70.81. If a call option on this stock has a strike price of $75, the intrinsic value of the call is $______.  (Note: answer must be accurate to the nearest cent).

Consider a call option whose maturity date is T and strike price is K. At any time t < T, is it always the case that the call option's price must be greater than or equal to max(St – K,0), where St is the stock price at t? (Your answer cannot be more than 30 words. Answers with more than 30 words will not be graded.)

Assume that K=61, St =65, t = 0.25 (i.e. time to expiry is 3 months), and the risk-free rate is 0.04. The current price of the put option is p = 4.  What would the price of the call option ‘c’ need to be for put-call parity to hold?

- You purchased 250 shares of common stock on margin for $28 per share. The initial margin is 70% and the stock pays no dividend but has a trading cost of $0.1 per share. Your rate of return would be if you sell the stock at $36 per share. Ignore interest on margin.

Suppose you buy a stock at $70 together with a put option with a strike of $70 and a premium of $5. Your minimum payoff at expiration is $_----

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?

A stock has a price of $73, which can later be $77 or $69 with equal probabilities. The options with exercise price $77 are valued at $1.53 for the call and $1.73 for the put. a. Calculate the gains/losses/returns for the stock. b. Calculate the gain/losses/returns for a covered call and protective put portfolio.

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?