Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Q3. (a) Parabola Bhd stock recently closed at RM52.51. If you write a covered call on Parabola by writing one September call with a strike
Q3. (a) Parabola Bhd stock recently closed at RM52.51. If you write a covered call on Parabola by writing one September call with a strike price of RM55, and buying 100 shares of stock at the market price. The option premium that you obtain from writing the call is RM370. (Hint: the stock will pay no dividends between now and the expiration date of the option) Required: Compute the total profit if the stock price remain unchanged? (2 marks) (ii) Compute the total profit if the stock price reach RM55? (4 marks) (iii) Compute the total loss if the stock price drop RM49? (4 marks)
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