Question
Part 1: Long Call You bought a European call option for a $2.00 option premium. The strike price of the option is $20. The potential
Part 1: Long Call You bought a European call option for a $2.00 option premium. The strike price of the option is $20. The potential stock prices at option maturity are provided in the table. A) Fill in the table for the payoffs and the net income for this option position (6 points)
Part 2: Short Call You wrote a European call option and receive a $2.00 option premium. The strike price of the option is $20. The potential stock prices at option maturity are provided in the table. C) Fill in the table for the payoffs and the net income for this option position (6 points)
Part 3: Long Put You bought a European put option for a $2.00 option premium. The strike price of the option is $20. The potential stock prices at option maturity are provided in the table. E) Fill in the table for the payoffs and the net income for this option position (6 points)
Part 4: Short Put You wrote a European put option and receive a $2.00 option premium. The strike price of the option is $20. The potential stock prices at option maturity are provided in the table. G) Fill in the table for the payoffs and the net income for this option position (6 points)
| Part 1: Long Call | |||||
| A) Table | |||||
| Stock Price | Exercise price | Total Payoff | Option Premium | Net income | |
| $0.00 | $20 | $2.00 | |||
| $5.00 | |||||
| $10.00 | |||||
| $15.00 | |||||
| $20.00 | |||||
| $25.00 | |||||
| $30.00 | |||||
| $35.00 | |||||
| $40.00 | |||||
| $45.00 | |||||
| $50.00 | |||||
| $55.00 | |||||
| $60.00 | |||||
| Part 2: Short Call | |||||
| C) Table | |||||
| Stock Price | Exercise price | Total Payoff | Option Premium | Net income | |
| $0.00 | |||||
| $5.00 | |||||
| $10.00 | |||||
| $15.00 | |||||
| $20.00 | |||||
| $25.00 | |||||
| $30.00 | |||||
| $35.00 | |||||
| $40.00 | |||||
| $45.00 | |||||
| $50.00 | |||||
| $55.00 | |||||
| $60.00 | |||||
| Part 3: Long Put | |||||
| E) Table | |||||
| Stock Price | Exercise price | Total Payoff | Option Premium | Net income | |
| $0.00 | |||||
| $5.00 | |||||
| $10.00 | |||||
| $15.00 | |||||
| $20.00 | |||||
| $25.00 | |||||
| $30.00 | |||||
| $35.00 | |||||
| $40.00 | |||||
| $45.00 | |||||
| $50.00 | |||||
| $55.00 | |||||
| $60.00 | |||||
| Part 4: Short Put | |||||
| G) Table | |||||
| Stock Price | Exercise price | Total Payoff | Option Premium | Net income | |
| $0.00 | |||||
| $5.00 | |||||
| $10.00 | |||||
| $15.00 | |||||
| $20.00 | |||||
| $25.00 | |||||
| $30.00 | |||||
| $35.00 | |||||
| $40.00 | |||||
| $45.00 | |||||
| $50.00 | |||||
| $55.00 | |||||
| $60.00 | |||||
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
International Financial Management
Authors: Jeff Madura
3rd Edition
0314862722, 978-0314862723
