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The common stock of the C . A . L . L . Corporation has been trading in a narrow range around $ 8 5
The common stock of the CALL Corporation has been trading in a narrow range around $ per share for months, and you believe it is going to stay in that range for the next months. The price of a month put option with an exercise price of $ is $
Required:
If the semiannual riskfree interest rate is what must be the price of a month call option on CALL stock at an exercise price of $ if it is at the money? The stock pays no dividends.
What would be a simple options strategy using a put and a call to exploit your conviction about the stock prices future movement? What is the most money you can make on this position? How far can the stock price move in either direction before you lose money?
How can you create a position involving a put, a call, and riskless lending that would have the same payoff structure as the stock at expiration? What is the net cost of establishing that position now?
Price of a month call option:
Strategy: Sell a straddle
Amount:
Stock Price:
Position Immediate CF:
Calllong
Putshort
Lending position:
Total:
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