Question 1

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A stock is currently selling for $51.78 a share. A call option on this stock with an exercise price of $35 has a premium of $12.60, and a call option with an exercise price of $60 has a premium of $5.74. What is the maximum per share dollar return on a bull call spread with these options?

Round the answer to two decimals.

Answer:

David purchases 100 shares of a stock with market price of $33.67 per share. A call option on this stock with exercise price of $60 has a premium of $1.03. A put option with exercise price of $25 has a premium of $4.83. If David uses these two options to form a collar, what will be his net before-tax per share dollar return if the stock price is $39.16 at expiration?

Question 2

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Round the answer to two decimals.

Answer:

Question 3

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A long strangle is created on a $45.16 stock with a call with an exercise price of $60 and premium of $2.24 and a put with an exercise price of $35 and a premium of $1.15. If the stock price is $22.66 at maturity, what is the net before-tax per share dollar return on this position?

Round the answer to two decimals.

Answer: