Given the following information, price of a stock $62 strike price of a six-month call $60 market
Question:
Given the following information, price of a stock $62 strike price of a six-month call $60 market price of the call $ 6 strike price of a six-month put $60 market price of the put $ 2 finish the following sentences.
a) The intrinsic value of the put is _________.
b) If an investor constructs a covered call, the amount invested (cash outflow) is _________.
c) The most the buyer of the put can lose is _________.
d) The maximum the buyer of the call can gain is _________.
e) The maximum amount the seller of the call naked can lose is _________.
At the expiration of the options (i.e., after six months have elapsed), the price of the stock is $79.
f) The profit (loss) from buying the stock is _________.
g) The profit (loss) from writing the call covered is _________.
h) The profit (loss) from buying the put is _________.
i) At expiration, the time premium paid for the call is _________.
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