Options Chain Total Records: 6 Calls Fri Jan 202023 Puts 2 How many different Bear Spreads can you create with this table of options? (5 points) 3 Create a Bear Spread with call options that maximizes the ratio of potential gain to loss. a. What should you buy? b. What should you sell? c. What does your strategy cost (or what cash inflow does it generate) today? d. What is the most your strategy can make (maximum profit)? e. What is the most that your strategy can lose? f. At what price(s) do you break even? You are interested in buying 100 shares of BUD. The ask price is $50.22 per share. a. If you want to try for a better price using an option strategy, what should you do? b. What does your strategy cost (or what cash inflow does it generate) today? c. If your strategy is successful, what will your net cost per share be? Ignore taxes d. What risk does your option-based strategy have that buying shares outright not have? 5. You are interested in selling 100 shares of BUD that you bought at $40 per share. a. If you sell outright today what price will you receive per share net of capital gains taxes of 20% ? b. If you want to try for a better price after taxes using an option strategy, what should you do? c. If your strategy is successful, what will your net after tax sale price per share be? Ignore taxes d. What risk does your option-based strategy have that buying shares outright not have? Options Chain Total Records: 6 Calls Fri Jan 202023 Puts 2 How many different Bear Spreads can you create with this table of options? (5 points) 3 Create a Bear Spread with call options that maximizes the ratio of potential gain to loss. a. What should you buy? b. What should you sell? c. What does your strategy cost (or what cash inflow does it generate) today? d. What is the most your strategy can make (maximum profit)? e. What is the most that your strategy can lose? f. At what price(s) do you break even? You are interested in buying 100 shares of BUD. The ask price is $50.22 per share. a. If you want to try for a better price using an option strategy, what should you do? b. What does your strategy cost (or what cash inflow does it generate) today? c. If your strategy is successful, what will your net cost per share be? Ignore taxes d. What risk does your option-based strategy have that buying shares outright not have? 5. You are interested in selling 100 shares of BUD that you bought at $40 per share. a. If you sell outright today what price will you receive per share net of capital gains taxes of 20% ? b. If you want to try for a better price after taxes using an option strategy, what should you do? c. If your strategy is successful, what will your net after tax sale price per share be? Ignore taxes d. What risk does your option-based strategy have that buying shares outright not have
