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this is a business analytics question please fully answer both parts. thank you A put option in finance allows you to sell a share of
this is a business analytics question please fully answer both parts. thank you
A put option in finance allows you to sell a share of stock at a given price in the future. There are diferent types of put options. A European put option alows you to sell a share of stock at a given price, called the evercise price, at a particular point in time after the purchese of the option. for example, suppose you purchase a she-month European put option for a share of stock wheh an exendse price of $27, If ak months later, the stock price per share is $27 or more, the optlon has no value. If in ak months the stock price is lower than $27 per share, then you can purchase the stock and immedtately sell if at the higher exercise price of $27. If the price per share in six months is 523.50 , you can purchase a share of the stsck far $23.50 and then use the put option to immediately sell the chare for $27. Your profit would be the difference, $27$23.5053.50 per share, less the cost of the option, If you paid $1.00 per put option, then your proft weuld be 53.30 - 31.00 o 32 . 50 per share. The point of purchasing a European option is to limit the risk of a decrease in the per-share price of the stock Suppase you purchased 360 shares of the stock at $33 per share and 120 six. month European put opeions with an oxercise price of $27. Each put option costs $1. (o) Using data tsbies, construct a model that shews the value of the portfolio with options and without options for a share price in six months between $15 and $35 per share in incrementa of $1.00, (b) Discuss the value of the portfollo with and without the European put cotions. A put option in finance allows you to sell a share of stock at a given price in the future. There are diferent types of put options. A European put option alows you to sell a share of stock at a given price, called the evercise price, at a particular point in time after the purchese of the option. for example, suppose you purchase a she-month European put option for a share of stock wheh an exendse price of $27, If ak months later, the stock price per share is $27 or more, the optlon has no value. If in ak months the stock price is lower than $27 per share, then you can purchase the stock and immedtately sell if at the higher exercise price of $27. If the price per share in six months is 523.50 , you can purchase a share of the stsck far $23.50 and then use the put option to immediately sell the chare for $27. Your profit would be the difference, $27$23.5053.50 per share, less the cost of the option, If you paid $1.00 per put option, then your proft weuld be 53.30 - 31.00 o 32 . 50 per share. The point of purchasing a European option is to limit the risk of a decrease in the per-share price of the stock Suppase you purchased 360 shares of the stock at $33 per share and 120 six. month European put opeions with an oxercise price of $27. Each put option costs $1. (o) Using data tsbies, construct a model that shews the value of the portfolio with options and without options for a share price in six months between $15 and $35 per share in incrementa of $1.00, (b) Discuss the value of the portfollo with and without the European put cotions Step by Step Solution
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