Question 4. All info is provided
balancing strategy? 4. You have a client with 500 total shares of NVDA; all those shares have outstanding covered calls (NVDA 11/26/21 C325). The stock was purchased at $322.60 per share and the client received $2.95 when the calls were sold. Use the attached Bloomberg screenshots to answer the following questions: (Assume values shown on the screenshots are also the values at option expiration and use the "Last" price for calculations.) a. Discuss three ways you may close that option position for the client. i. Evaluate the current status of this position. ii. Give the resulting portfolio holdings in NVDA following each method of closure. b. Which course of action will potentially result in the most gain or least loss (total position in the portfolio-not per share) for your client? Explain why and show numerical calculations to justify each action. c. Which action would you recommend and why? Suolain the importance of having NVDA $ (329,85 13,1 Z330.0 330.05: 1>280 | On 19 N Vo 53,386, C322.437H 330.88 L 319.05 Va 17.444 NVDA US Equity Actions Export Settings Option Monitor NVIDIA CORP 329.85 13.10 4.1358% 330.00/330.05 Hi 330.88 Lo 319.05 Volm 53386665 HV 50.38 Center 329.85 Strikes 35 Exp 31-Dec-210 Exch US Composite 02/24/22 EEN calc Mode As of 21-Nov-20218 10 Center Strike 13 Calls/Puts 19 Calls 19 Puts Term Structure Moneyness Strike Calls Ticker Bid Ask Last IVM DM Volm Oint 265,00 5 NVDA 12/31/21265 64.35y 68.75y 59.75 45.86 93 10 16 270.00 NVDA 12/31/21 C270 59.55y 63.70y 63.30 43.25 46 39 275.00 ) NVDA 12/31/21 C275 54.35y 62.109 55.25y 48.40 .88 18 280.00 NVDA 12/31/21 C280 52.00 55.20 54.00 46.53 .87 11 149 285.00 9 NVDA 12/31/21 C285 47.25 52.207 48.95 46.87 14 130 290.00 10 NVDA 12/31/21 C290 44.00 47.45y 46.39 46.61 .82 17 299 295.00 11) NVDA 12/31/21 C295 41.10y 42.607 41.637 46.61 .78 60 278 300.00 12 NVDA 12/31/21 C300 37.70 38.807 38.217 46.57 .75 181 672 305.00 13 NVDA 12/31/21 C305 34.15y 35.85 35.50y 46.98 72 84 295 310.00 14 NVDA 12/31/21 C310 27.65y 35.807 46.81 .68 126 315.00 19 NDA 12/31/21 (315 27.807 28.80 27.93y 45.82 .65 198 1547 320.00 18 NVDA 12/31/21 320 24.90 26.407 25.06 46.25 .61 285 471 325.00 17) NVDA 12/31/21 C325 22.55y 23.05 22.25y 45.76 .57 594 429 330.00 13 DA 12/31/21330 20.00 20.75y 20.10y 45.79 .53 430 267 335.00 14 NVDA 12/31/21 335 17.45 18.407 17.40 45.33 .49 81 83 340.00 20 N/DA 12/31/21340 15.80 16.207 15.55 45.62 .45 80 219 24 min MA 12/21/01 ru 12 AM 14 12 07 45 SN 876200 EST GMT-5:00 H980-4451-173 21-Nov-2021 16:42:27 611 220 30.60 186 NVDA US 11/26/21 $(29.90-10.130.00/31.10 11>20 On 19 N Opl 3,390 Vo 1,89 C 24.40H 31.40L 21.55Pre 19.80 NVDA US Equity Actions | Export Settings Option Monitor NVIDIA CORP 329.85 13.10 4.13581 330.00/330.05 Hi 330.88 Lo 319.05 Volm 53386665 HV 50.38 Center 329.85 Strikes 35 Exp 26-Nov-210 Exch US Composite 02/24/22 EEN calc Mode As of 21-Nov-20216 20 Centar Strike Calls/Puts Calls 14 Pats IS Term Structure Menetes Strikel Calls Ticker Bid Ask Last IVM DM Volm Oint JVLJVINUR 11/20 ZILE 20.10 20. 11 +74 23 305.00 NVDA 11/26/21 C305 24.80y 26.30 25.80 41.04 .92 1435 2260 307.50 g) NVDA 11/26/21 C307.5 22.807 24.05y 23.57 42.51 .89 571 349 310.0010 NVDA 11/26/21 C310 20.85y 22.05 21.407 42.61 .86 1839 1958 312.50 10 NVDA 11/26/21 312.5 18.709 19.50 19.28 41.72 300 612 315.00 11 NVDA 11/26/21 31S 16.85y 18.00 17.257 44.17 3235 2631 B1750 13 NVDA 11/26/21 317,5 15.75y 15.50y 43.40 .75 1085 1006 320,00 14 VOA 11/26/21 (320 13.409 13.80 13.66y 42.85 .71 12135 6966 322.50 19 NVDA 11/26/21 C322.5 11.80y 12.10y 11.95 42.87 .66 5553 1482 325.00 18 NVDA 11/26/21 C325 10.25y 10.50 10.407 42.62 .61 17215 6170 330.00 17 NVDA 11/26/21 C330 7.70y 7.907 7.75y 43.21 .51 40242 7172 335.0020 NVDA 11/26/21 C335 5.65 5.707 5.65 43.51 .41 17027 2421 340.00 19 NVDA 11/26/21 C340 4.00y 4.109 43.98 .32 16720 3373 345.00 20 ND 11/26/21 C34S 2.83y 2.87 44.92 .24 5493 1090 350.0020 NVDA 11/26/21 C350 2.02 2.07 2.02y 45.95 .18 25482 355.00 23 NVDA 11/26/21 C355 1.43 1.497 1.43 47.20 .14 4706 971 360.00 29 NVDA 11/26/21 C360 .95 1.04 1.02y 47.86 .10 6324 SW 076200 St GMT-5 60 H900-4451-773 21-10-2021 16:40128 % 15.15 4.027 2.947 7114 PAN A. 4 AF 18341 P. balancing strategy? 4. You have a client with 500 total shares of NVDA; all those shares have outstanding covered calls (NVDA 11/26/21 C325). The stock was purchased at $322.60 per share and the client received $2.95 when the calls were sold. Use the attached Bloomberg screenshots to answer the following questions: (Assume values shown on the screenshots are also the values at option expiration and use the "Last" price for calculations.) a. Discuss three ways you may close that option position for the client. i. Evaluate the current status of this position. ii. Give the resulting portfolio holdings in NVDA following each method of closure. b. Which course of action will potentially result in the most gain or least loss (total position in the portfolio-not per share) for your client? Explain why and show numerical calculations to justify each action. c. Which action would you recommend and why? Suolain the importance of having NVDA $ (329,85 13,1 Z330.0 330.05: 1>280 | On 19 N Vo 53,386, C322.437H 330.88 L 319.05 Va 17.444 NVDA US Equity Actions Export Settings Option Monitor NVIDIA CORP 329.85 13.10 4.1358% 330.00/330.05 Hi 330.88 Lo 319.05 Volm 53386665 HV 50.38 Center 329.85 Strikes 35 Exp 31-Dec-210 Exch US Composite 02/24/22 EEN calc Mode As of 21-Nov-20218 10 Center Strike 13 Calls/Puts 19 Calls 19 Puts Term Structure Moneyness Strike Calls Ticker Bid Ask Last IVM DM Volm Oint 265,00 5 NVDA 12/31/21265 64.35y 68.75y 59.75 45.86 93 10 16 270.00 NVDA 12/31/21 C270 59.55y 63.70y 63.30 43.25 46 39 275.00 ) NVDA 12/31/21 C275 54.35y 62.109 55.25y 48.40 .88 18 280.00 NVDA 12/31/21 C280 52.00 55.20 54.00 46.53 .87 11 149 285.00 9 NVDA 12/31/21 C285 47.25 52.207 48.95 46.87 14 130 290.00 10 NVDA 12/31/21 C290 44.00 47.45y 46.39 46.61 .82 17 299 295.00 11) NVDA 12/31/21 C295 41.10y 42.607 41.637 46.61 .78 60 278 300.00 12 NVDA 12/31/21 C300 37.70 38.807 38.217 46.57 .75 181 672 305.00 13 NVDA 12/31/21 C305 34.15y 35.85 35.50y 46.98 72 84 295 310.00 14 NVDA 12/31/21 C310 27.65y 35.807 46.81 .68 126 315.00 19 NDA 12/31/21 (315 27.807 28.80 27.93y 45.82 .65 198 1547 320.00 18 NVDA 12/31/21 320 24.90 26.407 25.06 46.25 .61 285 471 325.00 17) NVDA 12/31/21 C325 22.55y 23.05 22.25y 45.76 .57 594 429 330.00 13 DA 12/31/21330 20.00 20.75y 20.10y 45.79 .53 430 267 335.00 14 NVDA 12/31/21 335 17.45 18.407 17.40 45.33 .49 81 83 340.00 20 N/DA 12/31/21340 15.80 16.207 15.55 45.62 .45 80 219 24 min MA 12/21/01 ru 12 AM 14 12 07 45 SN 876200 EST GMT-5:00 H980-4451-173 21-Nov-2021 16:42:27 611 220 30.60 186 NVDA US 11/26/21 $(29.90-10.130.00/31.10 11>20 On 19 N Opl 3,390 Vo 1,89 C 24.40H 31.40L 21.55Pre 19.80 NVDA US Equity Actions | Export Settings Option Monitor NVIDIA CORP 329.85 13.10 4.13581 330.00/330.05 Hi 330.88 Lo 319.05 Volm 53386665 HV 50.38 Center 329.85 Strikes 35 Exp 26-Nov-210 Exch US Composite 02/24/22 EEN calc Mode As of 21-Nov-20216 20 Centar Strike Calls/Puts Calls 14 Pats IS Term Structure Menetes Strikel Calls Ticker Bid Ask Last IVM DM Volm Oint JVLJVINUR 11/20 ZILE 20.10 20. 11 +74 23 305.00 NVDA 11/26/21 C305 24.80y 26.30 25.80 41.04 .92 1435 2260 307.50 g) NVDA 11/26/21 C307.5 22.807 24.05y 23.57 42.51 .89 571 349 310.0010 NVDA 11/26/21 C310 20.85y 22.05 21.407 42.61 .86 1839 1958 312.50 10 NVDA 11/26/21 312.5 18.709 19.50 19.28 41.72 300 612 315.00 11 NVDA 11/26/21 31S 16.85y 18.00 17.257 44.17 3235 2631 B1750 13 NVDA 11/26/21 317,5 15.75y 15.50y 43.40 .75 1085 1006 320,00 14 VOA 11/26/21 (320 13.409 13.80 13.66y 42.85 .71 12135 6966 322.50 19 NVDA 11/26/21 C322.5 11.80y 12.10y 11.95 42.87 .66 5553 1482 325.00 18 NVDA 11/26/21 C325 10.25y 10.50 10.407 42.62 .61 17215 6170 330.00 17 NVDA 11/26/21 C330 7.70y 7.907 7.75y 43.21 .51 40242 7172 335.0020 NVDA 11/26/21 C335 5.65 5.707 5.65 43.51 .41 17027 2421 340.00 19 NVDA 11/26/21 C340 4.00y 4.109 43.98 .32 16720 3373 345.00 20 ND 11/26/21 C34S 2.83y 2.87 44.92 .24 5493 1090 350.0020 NVDA 11/26/21 C350 2.02 2.07 2.02y 45.95 .18 25482 355.00 23 NVDA 11/26/21 C355 1.43 1.497 1.43 47.20 .14 4706 971 360.00 29 NVDA 11/26/21 C360 .95 1.04 1.02y 47.86 .10 6324 SW 076200 St GMT-5 60 H900-4451-773 21-10-2021 16:40128 % 15.15 4.027 2.947 7114 PAN A. 4 AF 18341 P
