15 Calculating Payoffs Use the option quote information on Unilever NV from Euronext below to answer the questions that follow. Assume that 100 shares make 1 contract.

CODES AND CLASSIFICATION Code UN Market Euronext Amsterdam Vol. 6,251 09 Apr 2019 Exercise Type American Currency € O.I. 302,381 08 Apr 2019 UNDERLYING Name UNILEVER DR ISIN NL0000009355 Market Euronext Amsterdam Currency € Best Bid 51.43 09 Apr 2019 16:16 Best Ask 51.45 09 Apr 2019 16:16 Time CET Last 51.44 09 Apr 2019 16:15 Last Change % −0.43 Volume 1,422,917 High 51.72 Low 51.23 APRIL 2019 PRICES - 09/04/19 EXTENDED VIEW Calls Puts Settl. O.I.

Day Vol Last Bid Ask Strike Bid Ask Last Day Vol O.I. Settl.

1.45 10 − − 1.23 1.27 C 50.50 P 0.31 0.34 0.29 10 6 0.29 1.09 457 1 0.89 0.89 0.93 C 51.00 P 0.47 0.50 0.47 101 13,495 0.44 0.78 7 18 0.64 0.62 0.65 C 51.50 P 0.69 0.72 0.74 13 114 0.63 0.53 3,820 38 0.37 0.40 0.43 C 52.00 P 0.97 1.00 1.07 23 903 0.88 0.35 2 3 0.30 0.25 0.28 C 52.50 P 1.31 1.36 − − − 1.20

(a) Suppose you buy 20 contracts of the April €51.50 call option. How much will you pay, ignoring commissions?

(b) In part (a), suppose that Unilever is selling for €52.50 per share on the expiration date. How much is your options investment worth? What if the terminal share price is €50.50? Explain.

(c) Suppose you buy 10 contracts of the April €51 put option. What is your maximum gain? On the expiration date, Unilever is selling for €48 per share. How much is your options investment worth?

What is your net gain?

(d) In part (c), suppose you sell 10 of the April €51 put contracts. What is your net gain or loss if Unilever is selling for €48 at expiration? For €54? What is the break-even price – that is, the terminal share price that results in a zero profit?