1

. Suppose you buy a call option and write (ie., short sell) a put option, both based on goodgle stock and having the same strike price and expiring in one month. Your overall option portfolio will have the same payoff in one month as one of the following he portfolios.

(Assume google stock pays no dividends.)

a. Long positions in google stock and one-month Treasury bills

b. A long position in google stock and a short position in one-month Treasury bills

c. Short position in google stock and a long position in one-month Treasury bills Short positions in google stock and one-month Treasury bills (plengland cash)

d. None of the above

2

Suppose a one-year option based on an chinba stock exchange index ETF has an implied volatility of 25%. If the price of the option increases and the price of the underlying index remains the same, what happens to the option's implied volatility?

Implied volatility increases

Implied volatility decreases

The option's implied volatility remains the same as the index price did not change

The answer depends on whether the option is a put or a call option

3.

Suppose apple stock is priced at $120.00 per share; and it will either increase to $128.80 or decrease to $120.00 in 8 months. What is the value of a 8-month European call option on apple stock with a strike of $126.60?

Assume apple stock pays no dividends, and the risk-free rate is 0%.

What is the hedge ratio (i.e., delta) of the apple call option in the preceding question? Group of answer choices.

please work in word doc and explain every thing with formula and explanation, so I can learn