1) (60 points) In this problem, we are going to evaluate some of my trades in stock trak. Below is a pic of my transactions history. Trade Date Transaction Type Security Symbol Company Name QTY Price Comm. Amount Curr./Exch 09/08/2021 - 12:31 Market - Buy OPTIONS NKE21240160 Nike, Inc. - Ordinary Shares - Class B 10 $ 4.9000 -10 -4,900.00 USD / 1.00 09/08/2021 - 12:31 Market - Buy OPTIONS NKE21241160 Nike, Inc. - Ordinary Shares -Class B 10 $ 5.8000 -10 -5,800.00 USD / 1.00 09/08/2021 - 12:29 Market - Sell OPTIONS TSLA21101730 Tesla Inc -10 $ 19.9500 -10 19,950.00 USD / 1.00 09/08/2021 - 12:26 Market - Sell OPTIONS AAPL2110U152.5 Apple Inc -10 $ 0.4500 -10 450.00 USD / 1.00 09/03/2021 - 12:35 Market - Sell OPTIONS AAPL21100152.5 Apple Inc -40 $ $ 1.1200 -10 4,480.00 USD / 1.00 08/30/2021 - 15:21 Market - Buy OPTIONS TSLA21101730 Tesla inc 10 $ 16.1500 -10 -16,150.00 USD / 1.00 08/30/2021 - 12:31 Market - Buy OPTIONS AAPL21100152.5 Apple Inc 50 $ 2.0600 -10 -10,300.00 USD / 1.00 The first bet we are going to evaluate is at the very bottom of the pic where I purchased 50 AAPL put options on 8/30/21 with a strike price of 152.5 for $206 per put these puts expired Friday 9/10/21.4 On 9/3/21 my fur was burning! Check out pic below (the little red dot). I decided to bail as in sell 40 of my 50 put options, figuring I would capture as much of the term premium as I could given that I thought, wrongly so, that the puts would never get in the money - after all, there was a week until expiration and my puts were well out of the money the spot price for AAPL was $154.04 when I sold the 40 puts, a full $1.54 out of the money. Market Summary > Apple Inc NASDAQ: AAPL 148.97 USD -4.83 (-3.14%) + past 5 days Closed: Sep 10, 7:50 PM EDT Disclaimer Afterhours 148.67 -0.30 (0.20%) 1 day 5 days 1 month 6 months 6 YTD 1 year 5 years Max 158 154 04 USD Fri Sep 3 12 30 PM , 158 154 A 152 150 1 148 Sep 7 Sep 8 Sep 9 Sep 10 Market Summary > Apple Inc NASDAQ: AAPL On Wednesday, 9/8/21, I sold the remaining 10 put options since again, I thought the puts would never get in the money since the spot on 9/8 at 12:30 pm was $154.76, $2.26 out of the money!- 148.97 USD -4.83 (-3.14%) + past 5 days Closed: Sep 10, 7:59 PM EDT Disclaimer After hours 148.67 -0.30 (0.20%) a) (5 points) What was the term premium on the puts when I sold the 40 puts on Friday, 9/3? 1 day 5 days 1 month 6 months YTD 1 year 5 years Max - 158 154.76 USD Wed, Sep 8 12:30 PM 156 154 152 150 148 Sep 7 Sep 8 Sep 9 Sep 10 b) (5 points) What was the term premium on the puts when I sold the 10 puts on Wednesday, 9/8?" g As you can see be the graph of AAPL stock, I should have hung in there and not closed anything - so what the heck' happened? NEWS! See below: + "Judge Orders Apple to Loosen App Store Restrictions in Mixed Verdict Case pitted Steve Jobs's vision of a walled garden of Apple hardware against Epic co-founder Tim Sweeney's desire for an open ecosystem c)(10 points) Suppose the Judge' was a family member and told me of the 'order' beforehand. This being the case, I certainly would have held my short position on AAPL until expiration. Given this, calculate my profit and rate of return if I held on to all 50 put options until expiration (9/10), with the spot (at expiration) as it is above, equal to $148.97.4 e ^ ^ ^ ^ 2 d)(10 points) Now compare the revenue that I received by acting as I did by selling 40 puts on 9/3 and another 10 puts on 9/8 to the revenue I received if I would have held on until expiration in other words, what did my impatience cost me? As always, show all work! In the space below, draw the profit function of my 50 put options with a strike price of 152.5. Be sure to label graph completely and locate as point A, where the spot price at expiration is $148.97.4 4 15 points for correct and completely labeled graph e) (10 points) Suppose that at expiration I insisted on exercising the 50 put options. Go through the math, for me, the put option buyer (the TC vs. TR, the long way'). Now explain exactly what the writer of the 50 152.5 puts has to do given that I am exercising my 50 puts. Prove that this is in fact a zero sum game! f)(5 points) Now explain how each player would close their positions in the real world (no one ever exercises options!) if I held my short position until expiration, how would I close my position and how would the writer close their position? 1) (60 points) In this problem, we are going to evaluate some of my trades in stock trak. Below is a pic of my transactions history. Trade Date Transaction Type Security Symbol Company Name QTY Price Comm. Amount Curr./Exch 09/08/2021 - 12:31 Market - Buy OPTIONS NKE21240160 Nike, Inc. - Ordinary Shares - Class B 10 $ 4.9000 -10 -4,900.00 USD / 1.00 09/08/2021 - 12:31 Market - Buy OPTIONS NKE21241160 Nike, Inc. - Ordinary Shares -Class B 10 $ 5.8000 -10 -5,800.00 USD / 1.00 09/08/2021 - 12:29 Market - Sell OPTIONS TSLA21101730 Tesla Inc -10 $ 19.9500 -10 19,950.00 USD / 1.00 09/08/2021 - 12:26 Market - Sell OPTIONS AAPL2110U152.5 Apple Inc -10 $ 0.4500 -10 450.00 USD / 1.00 09/03/2021 - 12:35 Market - Sell OPTIONS AAPL21100152.5 Apple Inc -40 $ $ 1.1200 -10 4,480.00 USD / 1.00 08/30/2021 - 15:21 Market - Buy OPTIONS TSLA21101730 Tesla inc 10 $ 16.1500 -10 -16,150.00 USD / 1.00 08/30/2021 - 12:31 Market - Buy OPTIONS AAPL21100152.5 Apple Inc 50 $ 2.0600 -10 -10,300.00 USD / 1.00 The first bet we are going to evaluate is at the very bottom of the pic where I purchased 50 AAPL put options on 8/30/21 with a strike price of 152.5 for $206 per put these puts expired Friday 9/10/21.4 On 9/3/21 my fur was burning! Check out pic below (the little red dot). I decided to bail as in sell 40 of my 50 put options, figuring I would capture as much of the term premium as I could given that I thought, wrongly so, that the puts would never get in the money - after all, there was a week until expiration and my puts were well out of the money the spot price for AAPL was $154.04 when I sold the 40 puts, a full $1.54 out of the money. Market Summary > Apple Inc NASDAQ: AAPL 148.97 USD -4.83 (-3.14%) + past 5 days Closed: Sep 10, 7:50 PM EDT Disclaimer Afterhours 148.67 -0.30 (0.20%) 1 day 5 days 1 month 6 months 6 YTD 1 year 5 years Max 158 154 04 USD Fri Sep 3 12 30 PM , 158 154 A 152 150 1 148 Sep 7 Sep 8 Sep 9 Sep 10 Market Summary > Apple Inc NASDAQ: AAPL On Wednesday, 9/8/21, I sold the remaining 10 put options since again, I thought the puts would never get in the money since the spot on 9/8 at 12:30 pm was $154.76, $2.26 out of the money!- 148.97 USD -4.83 (-3.14%) + past 5 days Closed: Sep 10, 7:59 PM EDT Disclaimer After hours 148.67 -0.30 (0.20%) a) (5 points) What was the term premium on the puts when I sold the 40 puts on Friday, 9/3? 1 day 5 days 1 month 6 months YTD 1 year 5 years Max - 158 154.76 USD Wed, Sep 8 12:30 PM 156 154 152 150 148 Sep 7 Sep 8 Sep 9 Sep 10 b) (5 points) What was the term premium on the puts when I sold the 10 puts on Wednesday, 9/8?" g As you can see be the graph of AAPL stock, I should have hung in there and not closed anything - so what the heck' happened? NEWS! See below: + "Judge Orders Apple to Loosen App Store Restrictions in Mixed Verdict Case pitted Steve Jobs's vision of a walled garden of Apple hardware against Epic co-founder Tim Sweeney's desire for an open ecosystem c)(10 points) Suppose the Judge' was a family member and told me of the 'order' beforehand. This being the case, I certainly would have held my short position on AAPL until expiration. Given this, calculate my profit and rate of return if I held on to all 50 put options until expiration (9/10), with the spot (at expiration) as it is above, equal to $148.97.4 e ^ ^ ^ ^ 2 d)(10 points) Now compare the revenue that I received by acting as I did by selling 40 puts on 9/3 and another 10 puts on 9/8 to the revenue I received if I would have held on until expiration in other words, what did my impatience cost me? As always, show all work! In the space below, draw the profit function of my 50 put options with a strike price of 152.5. Be sure to label graph completely and locate as point A, where the spot price at expiration is $148.97.4 4 15 points for correct and completely labeled graph e) (10 points) Suppose that at expiration I insisted on exercising the 50 put options. Go through the math, for me, the put option buyer (the TC vs. TR, the long way'). Now explain exactly what the writer of the 50 152.5 puts has to do given that I am exercising my 50 puts. Prove that this is in fact a zero sum game! f)(5 points) Now explain how each player would close their positions in the real world (no one ever exercises options!) if I held my short position until expiration, how would I close my position and how would the writer close their position