what are the advantages and disadvantages of covered call and protective put which are options trading strategy?

Q: Discuss the payoff structures for call and put options and the determinants of call and put option…

A: Since you have asked multiple question, we will solve the first question for you. If you want to any…

Q: Describe about the Option-pricing models?

A: The option pricing model utilizes factors (stock value, exercise price, volatility, interest rate,…

Q: A) Explain the relationship between strike prices and implied volatilities under a price jump…

A: Solution- (A) Implied Volaitlity of associate choices contract is that worth of the volatility of…

Q: What’s the difference between a financial optionand a real option? What are some specific typesof…

A: Answer: Differences between financial options and real options: Financial options are those…

Q: Discuss the advantages and disadvantages of using options to hedge as compared to using futures…

A: Introduction: The future is the financial instrument of the derivative market in which a buyer and…

Q: In a qualitative analysis, what factors affect the value of a real option?

A: An alternate choice that is accessible to the organization's managers taking investment…

Q: What is a financial option? What is the singlemost important characteristic of an option?

A: Answer: A type of financial security that derives its value from the value of a particular…

Q: What is the key difference between futures contracts and options?

A: Both futures contracts and options are derivative instruments. Their value depends on the value of…

Q: 1. (a) Describe the defining features of call and put options and explain intuitively using an…

A: Derivatives: Derivatives are a class of securities that derive their values based on another asset…

Q: Why do options typically sell at prices higher than their exercise values?

A: An asset produced by stock exchanges is a financial option. These are sold by investors and…

Q: Discuss how equity can be viewed as an option. Who has theoption, and what decision can they make?

A: If an enterprise cannot satisfy its contractual obligation of debt, it is in default for every…

Q: Explain Price Return Swap?

A: A derivative contract which enables two parties to exchange financial instruments, cash flows,…

Q: Derive and critically evaluate the Cox, Ross and Rubinstein (1979) binomial option pricing model. In…

A: The Binomial pricing model is an important model for option pricing. It was developed by Cox, Ross,…

Q: Is it possible to view a firm's equity as an option? What could be the implications?

A: Let's recall the following two points:Basic accounting equation: Assets, A = Equity, E +…

Q: Explain with examples how a firm can hedge its risks using options

A: Hedging : Hedging can be understood as the  technique for risk management used to mitigate…

Q: The forex spot market is an over - the - counter market Select one : True or False

A: Stock market is a public market which exist for buying, selling and issuing stocks that traded on…

Q: What is the payoff to call option buyer and seller?

A: Call option A call option is referred to as the financial contract which provides its holder an…

Q: in the straddle option what is good to have an options with strike price equal, higher  or less than…

A: Straddle means Either Buying a Call as well as a Put Option or selling the call as well as put…

Q: What are the assumptions of Option-pricing models?

A: There are two option pricing models they are: Binomial model option pricing model Black Scholes…

Q: What are the Black-Scholes Options Pricing Model's underlying assumptions?

A: The Black-Scholes Options Pricing Model can be defined as the pricing model used to ascertain the…

Q: What are some factors that affect a call option’s value?

A: Options are the strategies opted by investors in which investors have a right but not a commitment…

Q: "Financial Derivative and Risk Management" Why are the probabilities of stock price movements not…

A: Option prices are basically the sum of the intrinsic and time value of an option. The price…

Q: What must be the price of a put option with the same strike price and expiration?

A:

Q: Which of the following rebalancing methodologies will ha market impact cost? Buy and Hold Momentum…

A: Rebalancing a portfolio It is a process by which the weights of the assets of a portfolio are…

Q: What is the purpose of the Black–Scholes Option Pricing Model?

A: Black-Scholes is a pricing model used to determine the fair price or theoretical value for a call or…

Q: Why do options sell at prices higher than their exercise values?

A: Options are contracts that give an 'option' or a choice to the holder to exercise the option or to…

Q: What is the importance of market risk premium?

A: Market risk premium Variance of the market return and the risk-free rate. It depicts the equity…

Q: What’s the difference between spot markets and futures markets?

A: Introduction: Spot market can be defined as a over the counter market which involves trading of…

Q: CBOE option market makers are also called liquidity providers. True or False?

A: CBOE stands for the Chicago Board Options Exchange.

Q: What are advantages of futures options over spot options?

A: Futures: The contract to buy or sell assets at predefined prices but will be paid and delivered…

Q: Equating theoretical option price and the market option price, we can solve for implied indicators.…

A: Option price is based on  1) Strike price  2) volatility  3) risk free rate  4) spot price

Q: The Monte Carlo method for pricing options is often referred to as a method of last resort. Explain…

A: Monte Carlo Simulation: It is a method that is used to model the probability of different outcomes…