Please help me to find out the answer with the step !!!!!!!!
1. The premium on an at the money (MP=EXP) American put option when the share was trading at {EXP} $60 was $2.50. On the day of expiry the market price of the underlying security upon which the put option is written is $49.25. Assuming that you purchased one naked put contract with previously stated terms what is your protoss from this transaction? [-1. $1.075 b. $825 c. -$825 {1. -$250 e. $250 Break even - MP = protfshare EXP - premium - MP = $60-$2.5-$49.25 2. The premium on an in the money American put option with an EXP of $78 was $6.65. The current MP of the underlying security upon which the put option is written is $60.50. Because of this price decline= you could now sell this put option in the secondary market for $18. What is the intrinsic 1value of this option? a. $0 b. $0.50 c. $10.85 {1. $17.50 e. $18 3. The market premium on an in the money American put option contract with an EXP price of $58 was $7.50. The current MP of the underlying security upon which the put option is written is $54.50. What is the time premium on this contract? a. None of the above b. 300 c. 350 d. 400 e. 750 4. The premium on an in the money American put option with an EXP of $48 was $2.20. The current market price of the underlying security upon which the put option was written is $47. What is the BEP? a. 44.80| b. 45.80 c. 46.80 {1. 47.00 e. 50.20 5. Lucca bough a naked in the money American put option with an EXP of $38 by paying a premium of $3.30. Here it is 3 months later and the current MP of the underlying security upon which the put option is written is $28.20. Assuming that Lucca exercises this option, what is his holding period rate of retum? a. - 100% b. 28 1 .81 82% c. 131318294: {1. 81 .8 1 82% e. 0.00% 6. Nick sold an American put option with an EXP of $68 and received a premium of $9.90. Three months later the current MP of the underlying security upon which the put option was written was $48.10. The option was exercised against him. What was Nick" 5 holding period rate of return? Assume he did not cover his position and that he did not have any margin requirements when he wrote the put option. a. -201.01% b. -101.01% c. -14.56% {1. -14.71% e. 0.00% he had no investment 7. Aaron was very busy playing with his cell phone during the lecture on puts so he missed most of that was discussed. He has now turned to Carter to help him out. Carter explains that Aaron had shorted one contract of a naked put option with an exercise price of $45 and a premium of $5.50 and then covered the position when the price of the underlying share was $37. So Aaron is now in a covered put position. If at maturity of the option the price of the underlying security is now $17, what is Aaron's prot or loss from his covered position? a. $250 b. -$800 c. $2,200 {1. $2,250 e. I knew I should have put my cell phone away and paid attention. $45 - $5.5 = $39.5 $39.5 - $37 = $2.5 X 100 = $250 8. Celestina shorted one contract of a naked call option with a premium of $2.50 and an exercise price of $43. One month later she covered her call when the price of the underlying share was $50. So Celestina is now in a covered call position. Here it is the maturity date of the option and the market price of the underlying security is $65. Celestina's prot or loss from this covered call position is? a. 1,500 b. 450 c. -1=950 d. 4200 e. I knew I should have stopped bothering blah blah $43 + $2.50 = $45850 $45.50 - $50 = -$4.5 X 100 9. A bear who goes long a put option has limited prot potential. a. True b. False 10. The correct denition of the intrinsic value of a put option is? 3. None of the below b. The immediate exercisable value of the option C. d. E. The difference between the exercise price on the put option and the market price of the underlying security for an in the money put option The difference between the market price of the put option and the immediate exercisable value of the option I) and c 11. Which of the following are true? 1. ii. iii. iv. 051.057 Bulls go long puts (no, bears go lun put options) Crabby bears short puts (crabby bulls do) If Kiya goes long a put option she has an obligation to sell shares at the excercise or striking price= to the writer of the option If Kiya goes long a put option she has an option (not obligation) to sell shares to the writer at the predetelmined price called the exercise or striking price (T) . iv only iii and iv iii, and iii i and ii '3? ii and iv 12. Which of the following statements is true? a. b. If Bretton goes long a put option he has unlimited loss potential If Kyra goes long an at the money put option she will lose the entire premium if the price of the underlying share stays the same or increases . Cody has shorted a naked call option and is getting more nervous, so to cover his position, he will go short an underlying chare The break even point on a put option does triple duty, it represents three things Both [1) and d} are true
