Question
URGENTLY NEEDED -- PLEASE HELP ME SOLVE Mr. Yamaha writes 1,000 shares of put options on Raven Groups stocks. The expiry date of the options
URGENTLY NEEDED -- PLEASE HELP ME SOLVE
Mr. Yamaha writes 1,000 shares of put options on Raven Groups stocks. The expiry date of the options is one week later. The price of the put options is $3 per share. Ravens stock is trading at $50 per share. The exercise price of the options is $48.
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Calculate Mr. Yamahas maximum potential profit on the options. (3 marks)
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Calculate Mr. Yamahas maximum potential loss on the options. (3 marks)
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Calculate the breakeven stock price of Mr. Yamahas trade. (4 marks)
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By writing the put options, what view does Mr. Yamaha have on Ravens stock price?
(4 marks)
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Suppose the stock price of Raven suddenly rises to $200 per share, describe what will happen to the price of the options? Explain your answer. (6 marks)
Section II (80 marks) Answer ALL questions in this section. Show all your calculations. Round your answers up to 2 decimal places. Question 1 (20 marks) Mr. Yamaha writes 1,000 shares of put options on Raven Group's stocks. The expiry date of the options is one week later. The price of the put options is $3 per share. Raven's stock is trading at $50 per share. The exercise price of the options is $48. A. Calculate Mr. Yamaha's maximum potential profit on the options. (3 marks) B. Calculate Mr. Yamaha's maximum potential loss on the options. (3 marks) C. Calculate the breakeven stock price of Mr. Yamaha's trade. (4 marks D. By writing the put options, what view does Mr. Yamaha have on Raven's stock price? (4 marks) Page 7 of 2 Suppose the stock price of Raven suddenly rises to $200 per share, describe what will happen to the price of the options? Explain your answer. (6 marks)
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