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PLEASE ANSWER ALL PARTS TO I,II & III NOTE: All options below are European option. 1. Consider the following option. Long a call option with
PLEASE ANSWER ALL PARTS TO I,II & III
NOTE: All options below are European option. 1. Consider the following option. Long a call option with X-price $1.17/ at a premium of $0.03/ 1. Plot the payoff chart of the above option. ( 35 points) 2. Mark the break-even point. (5 points) 3. Write up the maximum net profit and loss on the grid paper. (5 points) II. Consider the following option. Short a put option with X-price $1.22/ at a premium of $0.07/E 1. Plot the payoff chart of the above option ( 35 points). 2. Compute and mark the break-even point. ( 5 points). 3. Write up the maximum net profit and loss on the grid paper ( 5 points). III. Consider the following option strategy of two put options. Long a put option with X-price $1.14/ at a premium of $0.03/ Short a put option with X-price $1.09/ at a premium of $0.01 1. Plot the payoff chart of the above option strategy ( 35 points). 2. Compute and Mark the break-even point on the grid paper ( 5 points). 3. Write up the maximum net profit and loss on the grid paper ( 5 points). 4. Name the above option strategy (5 points). NOTE: All options below are European option. 1. Consider the following option. Long a call option with X-price $1.17/ at a premium of $0.03/ 1. Plot the payoff chart of the above option. ( 35 points) 2. Mark the break-even point. (5 points) 3. Write up the maximum net profit and loss on the grid paper. (5 points) II. Consider the following option. Short a put option with X-price $1.22/ at a premium of $0.07/E 1. Plot the payoff chart of the above option ( 35 points). 2. Compute and mark the break-even point. ( 5 points). 3. Write up the maximum net profit and loss on the grid paper ( 5 points). III. Consider the following option strategy of two put options. Long a put option with X-price $1.14/ at a premium of $0.03/ Short a put option with X-price $1.09/ at a premium of $0.01 1. Plot the payoff chart of the above option strategy ( 35 points). 2. Compute and Mark the break-even point on the grid paper ( 5 points). 3. Write up the maximum net profit and loss on the grid paper ( 5 points). 4. Name the above option strategy (5 points) Step by Step Solution
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