Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $46. Calls Puts Strike Option Expiration

Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $46.

Calls Puts
Strike
Option Expiration Price Vol. Last Vol. Last
Macrosoft Feb 47 104 2.13 59 3.13
Mar 47 80 2.37 41 3.54
May 47 41 2.65 30 3.96
Aug 47 22 2.86 22 4.00

a.

Suppose you buy 29 contracts of the February 47 call option. How much will you pay, ignoring commissions?

Suppose you buy 29 contracts of the February 47 call option. Macrosoft stock is selling for $49 per share on the expiration date.

b-1. How much is your options investment worth?
b-2. What if the terminal stock price is $48?

Suppose you buy 29 contracts of the August 47 put option.

c-1. What is your maximum gain?
c-2. On the expiration date, Macrosoft is selling for $42 per share. How much is your options investment worth?
c-3. On the expiration date, Macrosoft is selling for $42 per share. What is your net gain?

Suppose you sell 29 of the August 47 put contracts.

d-1.

What is your net gain or loss if Macrosoft is selling for $42 at expiration? (Enter your answer as a positive value.)

d-2. What is your net gain or loss if Macrosoft is selling For $50 at expiration? (Enter your answer as a positive value.)
d-3. What is the break-even stock price? (Round your answer to 2 decimal places, e.g., 32.16.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

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

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

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

Real Estate Finance And Investment

Authors: Terrence M. Clauretie, G. Stacy Sirmans

8th Edition

1629809942, 9781629809946

More Books

Students also viewed these Finance questions

Question

600 lb 20 0.5 ft 30 30 5 ft

Answered: 1 week ago