Question
The following question I would like assistance with. As you can see, Question B2 outlines the question. The next image outlines the table where the
The following question I would like assistance with. As you can see, Question B2 outlines the question. The next image outlines the table where the following option prices are: BHPWL9 and BHPS57. According to the question, I have used the information provided and done the following calculations in Excel. Is the work I've done in the Excel correct or have I come across errors? I have asked this question earlier, and I do apologise to anyone who is reading this again as my previous question did not have all relevant information.
Any assistance would be appreciated.
A B C D E F In-the-Money Writing Out-of-the-Money Writing 2 BHPWL9 44 BHPS57 50 Stock at 3 Expiration Total Profit Stock at Expiration Total Profit 35 1 =(35-44)+10 35 -9 =(35-50)+6 5 37 3 =(37-44)+10 37 -7 =(37-50)+6 39 5 =(39-44)+10 39 -5 =(39-50)+6 7 41 7 =(41-44)+10 41 -3 =(41-50)+6 8 43 9 =(43-44)+10 43 -1 =(43-50)+6 9 45 10 (45-44)+10+(44-45) 45 1 =(45-50)+6 0 47 10 =(47-44)+10+(44-47) 47 3 =(47-50)+6 49 10 =(49-44)+10+(44-49) 49 5 =(49-50)+6 2 51 10 =(51-44)+10+(44-51) 51 6 =(51-50)+6-(51-50) 3 53 10 =(53-44)+10+(44-53) 53 6 =(53-50)+6-(53-50) 4 55 10 =(55-44)+10+(44-55) 55 =(53-50)+6-(53-50) 5 57 10 =(57-44)+10+(44-57) 57 6 =(53-50)+6-(53-50) 6 60 10 =(60-44)+10+(44-60) 60 6 =(53-50)+6-(53-50) 7 60 10 =(60-44)+10+(44-60) 60 6 =(53-50)+6-(53-50)A B C D E F In-the-Money Writing Out-of-the-Money Writing 2 BHPWL9 44 BHPS57 50 Stock at 3 Expiration Total Profit Stock at Expiration Total Profit 35 1 =(35-44)+10 35 -9 =(35-50)+6 5 37 3 =(37-44)+10 37 -7 =(37-50)+6 39 5 =(39-44)+10 39 -5 =(39-50)+6 7 41 7 =(41-44)+10 41 -3 =(41-50)+6 8 43 9 =(43-44)+10 43 -1 =(43-50)+6 9 45 10 (45-44)+10+(44-45) 45 1 =(45-50)+6 0 47 10 =(47-44)+10+(44-47) 47 3 =(47-50)+6 49 10 =(49-44)+10+(44-49) 49 5 =(49-50)+6 2 51 10 =(51-44)+10+(44-51) 51 6 =(51-50)+6-(51-50) 3 53 10 =(53-44)+10+(44-53) 53 6 =(53-50)+6-(53-50) 4 55 10 =(55-44)+10+(44-55) 55 =(53-50)+6-(53-50) 5 57 10 =(57-44)+10+(44-57) 57 6 =(53-50)+6-(53-50) 6 60 10 =(60-44)+10+(44-60) 60 6 =(53-50)+6-(53-50) 7 60 10 =(60-44)+10+(44-60) 60 6 =(53-50)+6-(53-50)Question B2 (Quantification of Covered Call Writing). Use data presented in Figure 1 to answer the following. Assume you write BHPWL9 to have a in-the-money covered call writing and write BHPS57 to have a out-of-the-money covered call writing Use the following table template to record profit of two strategies. From the risk and rewards perspective, comment on these two types of covered call writing. (Words limit: 400; 15 Marks) In-the-Money Writing Out-of-the-Money Writing Stock at Expiration Total Profit Stock at Expiration Total Profit 35 35 37 37 39 39 41 41 43 43 45 45 47 47 49 49 51 51 53 53 55 55 57 57 60 60 Table 5: Two Covered Call Writing (Question B2)BID CODE OFFER STYLE OPEN (5) (5) LAST INTEREST STRIKE VOLUME TRADE ($) (5) BHPWL9 (A) 3.68 4.28 65 0 3.56 44.00 BHP8V7 (A) 3.31 3.88 6 0 3.21 . 44.50 BHP608 (A) 2.94 3.52 102 0 286 . 45.00 BHPFX7 (A) 2.71 3.17 25 0 2.56 . 45.50 BHPFZ7 (A) 2.42 2.79 204 0 2 27. 46.00 BHPKL7 (A) 2.12 2 51 50 0 1.59 - 46.50 BHPKN7 (A) 1.84 2.17 83 15 1.76 47.00 LAST: 47.41 BHPNS7 (A) 1.64 1.85 51 15 1.57 47.50 BHPNUT (A) 1.40 1.61 62 N 1.32 48.00 BHPNW7 (A) 1.20 1.39 71 0 1.13 " 48.50 BHPS17 (A) 1.02 1.21 0 0 0.97 . 49.00 BHPS37 (A) 0.87 1.05 O 0 0.84 . 49.50 BHP557 (A) 0.73 0.91 10 0 0.71 . 50.00Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started