Question
Suppose you are given the following information: Current Price of the PX stock: $161.37 Strike Price of a 1 year call option: $165 Market Price
Suppose you are given the following information:
Current Price of the PX stock: $161.37 Strike Price of a 1 year call option: $165 Market Price (premium) of the call option: $7.89 Strike Price of a 1 year put option: $165 Market Price (premium) of the put option: $18.80
(a) What is the maximum amount the buyer of the call option can gain (per share)? [2 Points]
(b) What is the maximum amount the seller of the call option can lose (per share)? [2 Points]
(c) What is the maximum amount the buyer of the put option can lose (per share)? [2 Points]
Suppose at the expiration date (after 1 year has elapsed), the price of the stock is at $150
(d) What is the profit(loss) per share if an investor had purchased the shares today? [2 Points]
(e) What is the profit/loss per share if the investor had purchased a put option contract? [2 Points]
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