Question 1 (70 marks) Information of call and put options of Tencent (00700.hk) on 1 April 2022 shown as the table. Tencent's stock price is trading at $385.00 Both call and put options will be expired on 28 April 2022. Each stock purchase is 100 shares. Each option contract has a lot size of 100 shares. Option information extracted from the Hong Kong Stock Exchange as at 1 April 2022. Underlying Underlying HKATS Call/ code name Code Put Expiry Strike Price Option Price Premium Change 700 TCH Call 360 4.93 700 Tencent Tencent Tencent TCH 370 Call Call 32.65 24.54 18.59 3.81 3.3 TCH 700 700 700 Tencent TCH Call 28/4/2022 28/4/2022 28/4/2022 28/4/2022 28/4/2022 28/4/2022 28/4/2022 28/4/2022 380 385 390 13.8 Tencent TCH Call 13.42 1.82 2.38 1.29 Tencent TCH Call 400 9.14 700 700 Tencent TCH Call 410 6.16 0.73 700 Tencent TCH Call 420 3.87 0.21 700 Tencent TCH Put 4.69 -0.63 -1.82 700 Tencent TCH 28/4/2022 28/4/2022 28/4/2022 Put 350 360 370 380 700 Tencent TCH Put 6.5 9.35 12.71 -2.88 700 Tencent TCH Put 28/4/2022 -4.29 700 TCH Put 28/4/2022 385 16.6 -5 700 Tencent Tencent Tencent TCH Puit 28/4/2022 390 -5.19 17.34 23.45 700 TCH Put 28/4/2022 400 -5.9 700 Tencent TCH Put 28/4/2022 410 28.5 -6.2 700 Tencent TCH Put 28/4/2022 420 38.55 -6.51 Based on option information on 1 April 2022 (See the table above). All option strategies are using these prices. All calculations are based on 1 lot trading (=100 shares). a) Long 1 contract of an in-the-money call (10 marks) b) Short 1 contract of an at-the-money call (10 marks) c) Long 1 contract of an at-the-money put (10 marks) d) Short 1 contract of an out-the-money put (10 marks) e) Covered call writing (15 marks) f) Protective put (15 marks) Today is 28 April 2022. Assume that Tencent's closing price is $390.00 You are required to explain your answers from questions a) to Show all calculations in details of option strategies. 1) What is/are breakeven price(s)? 1) What is payoff? 1) What is profit and loss? Maximum or minimum? iv) Construct a hand-drawing payoff and profit or loss diagram to show above answers ofi). 11) and in). (Copied graphs score zero mark) v) What is the type of strategies (Bull, bear or neutral)? Explain your expectation in details. Question 1 (70 marks) Information of call and put options of Tencent (00700.hk) on 1 April 2022 shown as the table. Tencent's stock price is trading at $385.00 Both call and put options will be expired on 28 April 2022. Each stock purchase is 100 shares. Each option contract has a lot size of 100 shares. Option information extracted from the Hong Kong Stock Exchange as at 1 April 2022. Underlying Underlying HKATS Call/ code name Code Put Expiry Strike Price Option Price Premium Change 700 TCH Call 360 4.93 700 Tencent Tencent Tencent TCH 370 Call Call 32.65 24.54 18.59 3.81 3.3 TCH 700 700 700 Tencent TCH Call 28/4/2022 28/4/2022 28/4/2022 28/4/2022 28/4/2022 28/4/2022 28/4/2022 28/4/2022 380 385 390 13.8 Tencent TCH Call 13.42 1.82 2.38 1.29 Tencent TCH Call 400 9.14 700 700 Tencent TCH Call 410 6.16 0.73 700 Tencent TCH Call 420 3.87 0.21 700 Tencent TCH Put 4.69 -0.63 -1.82 700 Tencent TCH 28/4/2022 28/4/2022 28/4/2022 Put 350 360 370 380 700 Tencent TCH Put 6.5 9.35 12.71 -2.88 700 Tencent TCH Put 28/4/2022 -4.29 700 TCH Put 28/4/2022 385 16.6 -5 700 Tencent Tencent Tencent TCH Puit 28/4/2022 390 -5.19 17.34 23.45 700 TCH Put 28/4/2022 400 -5.9 700 Tencent TCH Put 28/4/2022 410 28.5 -6.2 700 Tencent TCH Put 28/4/2022 420 38.55 -6.51 Based on option information on 1 April 2022 (See the table above). All option strategies are using these prices. All calculations are based on 1 lot trading (=100 shares). a) Long 1 contract of an in-the-money call (10 marks) b) Short 1 contract of an at-the-money call (10 marks) c) Long 1 contract of an at-the-money put (10 marks) d) Short 1 contract of an out-the-money put (10 marks) e) Covered call writing (15 marks) f) Protective put (15 marks) Today is 28 April 2022. Assume that Tencent's closing price is $390.00 You are required to explain your answers from questions a) to Show all calculations in details of option strategies. 1) What is/are breakeven price(s)? 1) What is payoff? 1) What is profit and loss? Maximum or minimum? iv) Construct a hand-drawing payoff and profit or loss diagram to show above answers ofi). 11) and in). (Copied graphs score zero mark) v) What is the type of strategies (Bull, bear or neutral)? Explain your expectation in details