Problems 19-1 The common stock of Teledyne trades on the NYSE. Teledyne has never paid a cash dividend. The stock is relatively risky. Assume that the beta for Teledyne is 1.3 and that Teledyne closed at a price of $162. Hypothetical option quotes on Teledyne are as follows: Call Strike Put Jul Oct Apr 3/8 S S Price Apr Jul Oct 140 23 1/2 S S 150 16 21 25 160 8 7/8 14 20 170 3 9 13 1/4 1801/ 451/4 9 r = not traded; s = no option offered. 3 9 3 3/4 7 10 20 r 9 11 19-3 Using the Teledyne data, answer the following: a. What is the cost of 10 October 150 call contracts in total dollars? From the text, what is the commission? Total cost? b. What is the cost of 20 October 160 put contracts in total dollars? What is the commission? Total cost? c. On the following day, Teledyne closed at $164. Which of the options would you have expected to increase? Decrease? d. The new quote on the October 150 call was 26. What would have been your one-day profit on the 10 contracts? e. The new quote on the October 160 put was 7 1/2. What would have been your one-day profit on the 20 contracts? f. What is the most you could lose on these 20 contracts? Problems 19-1 The common stock of Teledyne trades on the NYSE. Teledyne has never paid a cash dividend. The stock is relatively risky. Assume that the beta for Teledyne is 1.3 and that Teledyne closed at a price of $162. Hypothetical option quotes on Teledyne are as follows: Call Strike Put Jul Oct Apr 3/8 S S Price Apr Jul Oct 140 23 1/2 S S 150 16 21 25 160 8 7/8 14 20 170 3 9 13 1/4 1801/ 451/4 9 r = not traded; s = no option offered. 3 9 3 3/4 7 10 20 r 9 11 19-3 Using the Teledyne data, answer the following: a. What is the cost of 10 October 150 call contracts in total dollars? From the text, what is the commission? Total cost? b. What is the cost of 20 October 160 put contracts in total dollars? What is the commission? Total cost? c. On the following day, Teledyne closed at $164. Which of the options would you have expected to increase? Decrease? d. The new quote on the October 150 call was 26. What would have been your one-day profit on the 10 contracts? e. The new quote on the October 160 put was 7 1/2. What would have been your one-day profit on the 20 contracts? f. What is the most you could lose on these 20 contracts