Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Use the option chain below to answer questions 7-12 The following quotes were observed for options on a given stock on November 30, 2018. These
Use the option chain below to answer questions 7-12 The following quotes were observed for options on a given stock on November 30, 2018. These are American calls. Calls Puts StrikeNov 105 8.40 1104.40 an Dec 10 11.50 5.30 1.30 2.00 7.10 8.30 0.90 2.50 3.80 115 1.50 3.90 5.30 2.80 4.80 4.85 The stock price today is $113.25. 7. If you were to buy the November 105 call, how much would you pay to buy one contract? a. $840.00 b.$8.40 $8.25 d. $825.00 8. If you owned one contract of the December 110 put, what cash flow would you get if you exercised it immediately? a. so b.$325.00 . $3.25 d-$325.00 9. What is your profit per option if you buy the December 110 call and the stock is trading at 5120.00 on expiration date of this option? a $6.75 b.$110.00 C.$0 d.$2.90 10. According to the formula for put-call parity, what should be the theoretical price of the December 110 can? Assume the risk free rate is 2.5%, and that the option has 30 days til expiration a $113.25 b$7.10 $5.97 d. $6.06 11. If you sold the December 105 call, what is your maximum possible loss? a. $10 b. $113.25 c unlimited d. $6.75 12. Which of the following strategies would be considered a "straddle'? a. Buy the November 115 call and sell the January 105 put b. Buy the November 115 call and the November 110 cal c.Buy the stock and also buy the January 110 put d. Buy the November 110 call and the November 110 put
Step 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