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A. Call option price goes from $2.05 to $1.85 while the underlying stock price decreases from $40 to $38. What is the value of call
A. Call option price goes from $2.05 to $1.85 while the underlying stock price decreases from $40 to $38.
- What is the value of call Delta?
- What is the value of put Delta?
- If the price of the stock increases by $1, by approx. how much will call price change?
- If the price of the stock increases by $1, by approx. how much will put price change?
- You have 10,000 shares. How many puts are reqd. to be long to hedge the position?
B. Consider the following option strategy - buy stock at $40 and buy a 38 put for $2 and find out the following:
- Net cost of position =
- Breakeven stock price at expiration =
- Maximum gain =
- Maximum loss =
- Profit/loss at stock price of $45 =
C. Consider the following option strategy - buy stock at $40 and sell a 42 call for $1 and find out the following:
- Net cost of position =
- Breakeven stock price at expiration =
- Maximum gain =
- Maximum loss =
- Profit/loss at stock price of $55 =
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A Analyzing Option Greeks and Delta Hedging 1 Call Delta Based on the information provided we cannot determine the exact value of call Delta However w...Get Instant Access to Expert-Tailored Solutions
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