Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

For all questions, answer them based on per share price, per share premium, and etc. 2. You purchased Netflix at $140.71/share in 2017. Now, Netflix

image text in transcribed
For all questions, answer them based on per share price, per share premium, and etc. 2. You purchased Netflix at $140.71/share in 2017. Now, Netflix has gone up to $370.08 today. You believe that Netflix will continue going up but you would like to protect the profit you have already earned by engaging in "Protective Put" strategy just in case it goes down in the future. You decide to purchase a put option with the exercise price at $360 and an expiration date on June 19, 2020. The premium for the put option is $32.5. a. What is your break-even point? (1.5 points) b. Show the contingency graph and label each point including S=K, B/E, the intersection between the contingency graph and/or X/Y axis. Also label X-axis and Y- axis. (5 points) c. What is your profit/loss if the stock price on the expiration date is (1) $10, (2) $380, (3) $500? (6 points)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Lectures On Public Economics

Authors: Anthony B. Atkinson, Joseph E. Stiglitz

1st Edition

0691166412, 978-0691166414

More Books

Students also viewed these Finance questions