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(20 points) Assume that one option contract gives the buyer the right to buy one share of each common stock on which the option
(20 points) Assume that one option contract gives the buyer the right to buy one share of each common stock on which the option is written. Also, ignore cash dividends on the stocks to be paid on or before expiration. You have just bought one Apple's March 170 call contract. The premium for the call option was $4.50. Hold until the option expires. (1) What is the breakeven stock price at expiration? (2) What is the maximum possible loss on this transaction? (3) What is the maximum possible profit on this transaction. (4) Graph the profit/loss diagram of your position at expiration. (20 points) Assume that one option contract gives the buyer the right to buy one share of each common stock on which the option is written. Also, ignore cash dividends on the stocks to be paid on or before expiration. You have just bought one Apple's March 170 call contract. The premium for the call option was $4.50. Hold until the option expires. (1) What is the breakeven stock price at expiration? (2) What is the maximum possible loss on this transaction? (3) What is the maximum possible profit on this transaction. (4) Graph the profit/loss diagram of your position at expiration. (20 points) Assume that one option contract gives the buyer the right to buy one share of each common stock on which the option is written. Also, ignore cash dividends on the stocks to be paid on or before expiration. You have just bought one Apple's March 170 call contract. The premium for the call option was $4.50. Hold until the option expires. (1) What is the breakeven stock price at expiration? (2) What is the maximum possible loss on this transaction? (3) What is the maximum possible profit on this transaction. (4) Graph the profit/loss diagram of your position at expiration.
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