On 1st October, stock OINK that pays a dividend of 8% p.a. twice a year (September and March) is currently traded at 95 EUR. The
On 1st October, stock OINK that pays a dividend of 8% p.a. twice a year (September and March) is currently traded at 95 EUR. The risk-freeinterest rate is 10% and March put with strike 105 EUR has a premium of 15 EUR.
- Is the option in-the-money or out-of-the-money?
- What is the intrinsic and extrinsic (time) value?
- What is the maximum loss of the portfolio (long stock + long put)?
- What is the maximum profit of the portfolio?and why
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Authors: Sylvain Bouteille, Diane Coogan-Pushner
2nd Edition
1119835631, 978-1119835639
