Answered step by step
Verified Expert Solution
Question
1 Approved Answer
. Observe the following options prices for stock ACDC for the date of SEP 7, 2017: CALLS PUTS K SEP 17 SEP 17 $38.50 $38.50
. Observe the following options prices for stock ACDC for the date of SEP 7, 2017: CALLS PUTS K SEP 17 SEP 17 $38.50 $38.50 $38.50 $38.50 $38.50 $30 $35 $40 $45 $50 $4.00 $0.90 $0.50 $0.20 OCT 17 $9.00 $5.00 $1.50 $0.80 $0.50 $0.50 $2.50 $7.00 $11.00 OCT 17 $0.60 $1.50 $4.00 $7.80 $11.00 On August 10.2017 Ms. JD opened the following four ACDC options positions: The premiums on AUG.10.17 were Long 10, OCT.17 K = 40 calls. $1.00/share. Short 10, OCT.17 K= 45 calls. $1.50/share Long 5, OCT.17 K = 45 puts. $2.00/share Short 5, OCT.17 K = 50 puts. $10.00/share. All the options are American style options and every option is for 100 shares. 5.1 Calculate JD's total cash flow on AUG 10, 2017 when JD opened these positions. 5.2 Today, SEP 7. 17, JD still holds the same four positions opened on AUG.10.17 and JD decides to close all four positions today and quit the market. Use the above table of today's market prices (premiums) to explain exactly how JD closes all her options positions obtaining the highest CF that she can obtain from each option and calculate JD's total profit. Use 100 shares for every option. . Observe the following options prices for stock ACDC for the date of SEP 7, 2017: CALLS PUTS K SEP 17 SEP 17 $38.50 $38.50 $38.50 $38.50 $38.50 $30 $35 $40 $45 $50 $4.00 $0.90 $0.50 $0.20 OCT 17 $9.00 $5.00 $1.50 $0.80 $0.50 $0.50 $2.50 $7.00 $11.00 OCT 17 $0.60 $1.50 $4.00 $7.80 $11.00 On August 10.2017 Ms. JD opened the following four ACDC options positions: The premiums on AUG.10.17 were Long 10, OCT.17 K = 40 calls. $1.00/share. Short 10, OCT.17 K= 45 calls. $1.50/share Long 5, OCT.17 K = 45 puts. $2.00/share Short 5, OCT.17 K = 50 puts. $10.00/share. All the options are American style options and every option is for 100 shares. 5.1 Calculate JD's total cash flow on AUG 10, 2017 when JD opened these positions. 5.2 Today, SEP 7. 17, JD still holds the same four positions opened on AUG.10.17 and JD decides to close all four positions today and quit the market. Use the above table of today's market prices (premiums) to explain exactly how JD closes all her options positions obtaining the highest CF that she can obtain from each option and calculate JD's total profit. Use 100 shares for every option
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started