Consider the following positions on the Intel stock. For each of the positions choose the strike X = $50. Choose May option.

a. Long 1 call contract.

b. Short 1 put.

c. Long 1 call + short 1 put.

d. Long 1 call + long 1 put.

e. Long 1 call with strike $50 and short 1 call with strike $52.5.

Assume that you enter and close the positions at the mid point of bid-ask spread. For each position (a-e) answer the following questions. Assume that you trade each contract on March 17 (i.e. enter the positions).

1. Close out your positions on March 24. Calculate your net dollar gain or loss.

2. Now assume that you exercise options on March 24. For each position compute your net gain or loss.

3. For each position draw the payoff diagram, marking the strikes and the stock price on March 24 clearly, as well as your payoff.

- x AutoSave om H File Home 2 Insert HW4_data - Compatibility Mode - Word Layout References Mailings Search View Design Review Help PDFescape Desktop Creator Table Design Share Comments Times New Roma 9 A A Aa A PasteBIU XXALA E Clipboard Font A T EB Paragraph AaBbcc AaBb C AaBbCcI AalbCel AaBbcc Emphasis Heading 1 Nomal Strong Subtitle dominic dallaire DD Layout Find Replace s Dictate Select Editing Voice Sensitivity Styles Sensitivity March 17 INTC (INTEL CORP) 49.655 +5.045 . Calls 1 INTC 49.000 INTC 50.000 INTC 52.500 INIC 55.000 . Safe Net Bid Ask Vol Open Int Strikelty 4.75 +0.8 4.7 4.9 53 513 20 Apr 49 3.89 +0.415 4.2 4.35 438 720 20 Apr 50 2.95 +0.525 2.97 3.1 1,152 5103 20 Apr 52.5 1.99 +0.395 1.95 2 1,030 7530 20 Apr 55 6.85 +0.95 6.65 6.9 55 21 20 May 47.5 Puts INTC 49.000 INTC 50.000 INTC 52.500 INTC 55.000 Sart Net Bid Ask Vol enten 3.75 -1.6 4.05 4.2 157 1703 5 -0.875 4.5 4.65 461 8310 5.42 -1.905 5.75 5.9 130 6018 7.35 -1.9 7.25 4.85 -1.25 4.7 4.95 129 2 INTC 47.500 INTC 47.500 . INTC 50.000 5 +0.35 5.25 5.5 1,256 425 20 May 50 INTC 50.000 5.61 -1.79 5.85 61 430 2000 3 . INTC 52.500 3.8 +0.225 4.05 4.25 195 1919 20 May 52.5 INTC 52.500 7.4 -1.425 7.15 7.35 27 4262 . INTC 55.000 3.05 +0.375 3 3.2 394 3402 20 May 55 INTC 55.000 8.12 -2.28 8.55 8.8 18 3154 . 352 words IX Focus 2 1 + 133% Page 1 of 1 1 Type here to search Otw e 9 - - -- 19:05 x 9:05 AM - x AutoSave om H File Home 2 Insert HW4_data - Compatibility Mode - Word Layout References Mailings Search View Design Review Help PDFescape Desktop Creator Table Design Share Comments Times New Roma 9 A A Aa A BIU x x A 2-A Font A T SE OB Paragraph AaBbcc AaBb C AaBbCcI AalbCel AaBbcc Emphasis Heading 1 Nomal Strong Subtitle Paste dominic dallaire DD Layout Find Replace s Dictate Select Editing Voice 6 BBC Raluca Mater materiale Sensitivity Clipboard