Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

i need detail explaination of how to do this homework please. not the answer but detail math explaination on how to get the answer as

i need detail explaination of how to do this homework please. not the answer but detail math explaination on how to get the answer as soon as possible please thank you
Underlying priced at 1000 with MAD of 250. 1) What is the probability of option expiring ITM for a 1200 PUT?
2)What is the average underlying price when PUT expires ITM?
3)What is the average PUT option payment conditional on that the PUT expires in the money?
4)How much should the PUT be priced at today? 5) Out of the price in Q2d, how much of that is intrinsic value and how much is time value?
image text in transcribed
Q2. Underlying priced at 1000 with MAD of 250 . (15 points) Q2a. What is the probability of option expiring ITM for a 1200 PUT? (3 points) Q2b. What is the average underlying price when PUT expires ITM? (3 points) Q2c. What is the average PUT option payment conditional on that the PUT expires in the money? (3 points) Q2d. How much should the PUT be priced at today? (3 points) Q2e. Out of the price in Q2d, how much of that is intrinsic value and how much is time value? (3 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

Step: 3

blur-text-image

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

Finance And Sustainability

Authors: William Sun, Celine Louche, Roland Perez

1st Edition

1780520921, 978-1780520926

More Books

Students also viewed these Finance questions

Question

to encourage a drive for change by developing new ideas;

Answered: 1 week ago

Question

4 What are the alternatives to the competences approach?

Answered: 1 week ago