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 $40. Calls Puts Strike Price Vol.

image text in transcribedimage text in transcribed

Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $40. Calls Puts Strike Price Vol. Option Expiration Macrosoft Feb Mar Last 1.53 42 177 Last 2.53 2.94 3.36 3.40 42 42 42 May Aug 35 16 2.05 2.26 a. Suppose you buy 23 contracts of the February 42 call option. How much will you pay, ignoring commissions? Cost $ 3,519 Suppose you buy 23 contracts of the February 42 call option. Macrosoft stock is selling for $43 per share on the expiration date. b-1. How much is your options investment worth? b-2. What if the terminal stock price is $42? b-1. Payoff if stock price is $43 b-2. Payoff if stock price is $42 $ $ 1,219 (3,519) Suppose you buy 23 contracts of the August 42 put option. c-1. What is your maximum gain? C-2. On the expiration date, Macrosoft is selling for $36 per share. How much is your options investment worth? C-3. On the expiration date, Macrosoft is selling for $36 per share. What is your net gain? C-1. Maximum gain c-2. Position value c-3. Net gain Suppose you sell 23 of the August 42 put contracts. d-1. What is your net gain or loss if Macrosoft is selling for $37 at expiration? (Enter your answer as a positive value.) d-2. What is your net gain or loss if Macrosoft is selling For $44 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.) d-1. d-2. d-3. Break-even stock price

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

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

Multinational Financial Management

Authors: R M Srivastava

1st Edition

8174466703, 9788174466709

More Books

Students also viewed these Finance questions

Question

BPR always involves automation. Group of answer choices True False

Answered: 1 week ago

Question

OUTCOME 3 Describe pay equity and strategies for implementing it.

Answered: 1 week ago