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Please see attachment and assist with finance questions. Note: please use excel for calculations and provide mini-explanation as I would like to understand how you
Please see attachment and assist with finance questions. Note: please use excel for calculations and provide mini-explanation as I would like to understand how you got the solution.
1. Assume an option trader bought 10 July 25 calls on General Electric Co. (GE) for 1.35. If the stock closed at 28 on expiration and the option position was liquidated, calculate the dollar amount of profit or loss on the trade before commissions and taxes. 2. Assume an investor establishes a straddle position on Chevron Corp. (CVX) by buying a December 95 call priced at 1.50 and simultaneously buying a December 95 put priced at 3.50. Graph the profit picture of this straddle position. 3. Suppose the Coca-Cola Co. (KO) is trading at $54 and buy one Aug55 put for $2.55 and sell one Aug50 put for $0.85. Calculate your maximum potential profit and loss. Is this a bearish or bullish position? 4. Using the Black-Scholes option valuation formula, compute the price of a Marathon Oil (MRO) call option with 4 months to expiration that has a strike price of 45. Assume the current stock price is 48, the T-bill yield is 4.5%, and the volatility of MRO is 30%. 5. On the CBOT one Gold futures contract trades in units of 100 ounces of gold. Suppose you bought one contract at $500/ounce and sold as the price spiked to $510/ounce. Compute your profit or loss. 6. On the CBOT one Gold futures contract trades in units of 100 ounces of gold, the minimum initial margin requirement is $1,215 per contract, and minimum maintenance margin is $900 per contract. Suppose you sold short one contract at $500/ounce using the $1,215 minimum initial margin and the price spiked to $510/ounce on an active trading day. Compute the daily percentage profit or loss in your margin account. How much must be deposited in your margin account to prevent liquidation of your position? 7. On the CBOT, the value of one DJI A futures contract is computed as $10 times the value of the Dow Jones Industrial Average, the minimum initial margin is $7,005 and the maintenance margin requirement is $5,604 per contract. If you bought one contract at 11,400 using the minimum initial margin and the price dropped 11,250 on an active trading day, compute the daily percentage profit or loss in your margin account. How much must be deposited in your margin account to prevent liquidation of your position? How much would the DJIA have to fall in a single trading day to wipe you outStep by Step Solution
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