Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Three months ago (in October) you bought one Tesla April Call option. Today (January) you've decided that Tesla's share price has peaked and you want

image text in transcribed
image text in transcribed
Three months ago (in October) you bought one Tesla April Call option. Today (January) you've decided that Tesla's share price has peaked and you want to get out of the long position. What is your profit if you exercise compared to your profit if you execute an offset (reversing) trade? (Calculate the round-trip profit net of the cost of buying the option in October. Express your answer as the difference between the offset profit and profit from exercise. Assume that the option is American and that there is only one share per option contract.) Enter your answer in dollars rounded to the nearest dollar. October (Three months Ago) Tesla Stock Price = $816 April Tesla Call option (X=600) premium = $326 January (Today) Tesla Stock Price = $1018 April Tesla Call option (X=600) premium = $449 You are looking over your brother's portfolio. In his portfolio, he is holding one long position and one short position. Jimmy, your brother, bought 1600 shares of Sunny Inc. each for $54. He sold 400 shares of Rainy Ltd. for $50 a share. Calculate the portfolio weight on the Rainy Ltd. position. Enter your answer as a percent rounded to 2 decimal places without the % symbol. For example if your answer is 0.1012 enter 10.12. If your answer is -0.1012 enter - 10.12

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Accounting

Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik

10th edition

0-07-794127-6, 978-0-07-79412, 978-0077431808

Students also viewed these Finance questions