Question
Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $114, and the size of each
Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $114, and the size of each contract is 100 shares.
a. Suppose you buy 10 contracts of the February 110 call option. How much will you pay, ignoring commissions?
b-1. Suppose you buy 10 contracts of the February 110 call option and also suppose that Macrosoft stock is selling for $140 per share on the expiration date. How much is your options investment worth?
b-2. Suppose you buy 10 contracts of the February 110 call option and also suppose that Macrosoft stock is selling for $125 per share on the expiration date. How much is your options investment worth?
c-1. Suppose you buy 10 contracts of the August 110 put option. What is your maximum gain?
c-2. Suppose you buy 10 contracts of the August 110 put option. On the expiration date, Macrosoft is selling for $104 per share. How much is your options investment worth?
c-3. Suppose you buy 10 contracts of the August 110 put option. On the expiration date, Macrosoft is selling for $104 per share. What is your net gain?
d-1. Suppose you sell 10 of the August 110 put contracts. What is your net gain or loss if Macrosoft is selling for $103 at expiration? For $132?
d-2. Suppose you sell 10 of the August 110 put contracts. What is the break-even pricethat is, the terminal stock price at expiration that results in a zero profit?
Calls Puts Option and TSX Close Macrosoft Expiration February March May August Strike Price 110 110 110 110 Vol. Last Vol. 857.6040 61 8.80 22 22 10.25 11 3 13.05 3 Last 0.60 1.55 2.85 4.70Step by Step Solution
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