Question
The table on the left shows the prices of calls and puts at different strike prices of options on Alphabet Inc. (GOOG) on 14th March
The table on the left shows the prices of calls and puts at different strike prices of options on Alphabet Inc. (GOOG) on 14th March 2019. The expiration of all options is the same - September 20, 2019. The market price of the GOOG stock on 14th March 2019 is $1,185.55. Remember to make buy or sell decisions of options based on bid/ask prices (not the last prices).
Answer the following questions:
(a) You expect that the stock price will be around $1,100 and will not move that much soon. You identify three strike prices, $1,050, $1,100, and $1,150, which enable you to devise a strategy to maximize the profit. What would be the strategy? Find the profit for such a strategy when the stock price is $1,120. Is this the maximum profit? If not, at what price can you maximize the profit?
(b) If the stock price unexpectedly goes below $1,050, how will the strategy affect your profit? Explain with calculation.
(c) Find the ranges of prices for which you will have a profit.
Contract Name | Last Trade Date | Strike | Last Price | Bid | Ask | Volume | Open Interest | |
GOOG190920C01000000 | 2019-03-12 12:53PM EDT | 1000 | 225.8 | 214.1 | 216.9 | 1 | 9 | |
GOOG190920C01025000 | 2019-02-04 11:00AM EDT | 1025 | 158.9 | 196 | 198.3 | 0 | 1 | |
GOOG190920C01050000 | 2019-03-14 9:46AM EDT | 1050 | 178.1 | 172.9 | 175.6 | 2 | 9 | |
GOOG190920C01075000 | 2019-03-12 9:59AM EDT | 1075 | 159.5 | 153.5 | 156.2 | 1 | 15 | |
GOOG190920C01100000 | 2019-03-13 10:01AM EDT | 1100 | 144.73 | 134.9 | 137.7 | 2 | 12 | |
GOOG190920C01125000 | 2019-03-05 1:02PM EDT | 1125 | 98.35 | 117.7 | 120.3 | 1 | 19 | |
GOOG190920C01150000 | 2019-03-13 10:01AM EDT | 1150 | 110.22 | 101.6 | 104.1 | 1 | 23 | |
GOOG190920C01175000 | 2019-03-13 3:58PM EDT | 1175 | 92.26 | 86.7 | 89.1 | 3 | 34 | |
GOOG190920C01220000 | 2019-03-14 1:12PM EDT | 1220 | 66.8 | 63.5 | 65.4 | 2 | 86 | |
GOOG190920C01240000 | 2019-03-13 12:55PM EDT | 1240 | 60.8 | 54.5 | 56.3 | 43 | 127 | |
GOOG190920C01300000 | 2019-03-14 12:12PM EDT | 1300 | 34.45 | 32.8 | 34.3 | 4 | 135 | |
GOOG190920C01340000 | 2019-03-14 1:43PM EDT | 1340 | 24.14 | 20.5 | 23.8 | 2 | 1,321 | |
GOOG190920P01000000 | 2019-03-14 3:07PM EDT | 1000 | 15.55 | 15.3 | 16.5 | 5 | 98 | |
GOOG190920P01025000 | 2019-03-08 1:58PM EDT | 1025 | 31.45 | 19.2 | 20.9 | 9 | 22 | |
GOOG190920P01050000 | 2019-03-13 2:08PM EDT | 1050 | 21.5 | 21.5 | 26 | 5 | 38 | |
GOOG190920P01075000 | 2019-03-13 2:06PM EDT | 1075 | 26.39 | 27 | 32 | 3 | 13 | |
GOOG190920P01100000 | 2019-03-14 1:50PM EDT | 1100 | 34.8 | 35.2 | 38 | 1 | 67 | |
GOOG190920P01125000 | 2019-03-14 1:51PM EDT | 1125 | 42.1 | 42.6 | 44.1 | 1 | 29 | |
GOOG190920P01150000 | 2019-03-13 1:04PM EDT | 1150 | 47.52 | 51.2 | 52.8 | 7 | 44 | |
GOOG190920P01175000 | 2019-03-14 3:00PM EDT | 1175 | 60.35 | 61.1 | 62.9 | 10 | 2 | |
GOOG190920P01220000 | 2019-03-12 10:45AM EDT | 1220 | 79.4 | 82.5 | 84.5 | 12 | 19 | |
GOOG190920P01240000 | 2019-03-11 1:17PM EDT | 1240 | 108.68 | 93.5 | 95.6 | 1 | 2 | |
GOOG190920P01300000 | 2019-03-11 11:36AM EDT | 1300 | 152.3 | 132.5 | 134.9 | 1 | 0 | |
GOOG190920P01340000 | 2019-03-14 1:43PM EDT | 1340 | 159.82 | 163.1 | 165.7 | 2 | 2 |
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