Question
Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $28. Calls Puts Strike Option Expiration
Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $28. |
Calls | Puts | |||||||||||||||||
Strike | ||||||||||||||||||
Option | Expiration | Price | Vol. | Last | Vol. | Last | ||||||||||||
Macrosoft | Feb | 30 | 86 | .33 | 41 | 1.33 | ||||||||||||
Mar | 30 | 62 | .57 | 23 | 1.74 | |||||||||||||
May | 30 | 23 | .85 | 12 | 2.16 | |||||||||||||
Aug | 30 | 4 | 1.06 | 4 | 2.20 | |||||||||||||
a. | Suppose you buy 11 contracts of the February 30 call option. How much will you pay, ignoring commissions? |
Cost | $ |
Suppose you buy 11 contracts of the February 30 call option. Macrosoft stock is selling for $31 per share on the expiration date. |
b-1 | How much is your options investment worth? |
Payoff | $ |
b-2 | What if the terminal stock price is $30? |
Payoff | $ |
Suppose you buy 11 contracts of the August 30 put option. |
c-1 | What is your maximum gain? |
Maximum gain | $ |
c-2 | On the expiration date, Macrosoft is selling for $24 per share. How much is your options investment worth? |
Position value | $ |
c-3 | On the expiration date, Macrosoft is selling for $24 per share. What is your net gain? |
Net gain | $ |
Suppose you sell 11 of the August 30 put contracts. |
d-1 | What is your net gain or loss if Macrosoft is selling for $26 at expiration? (Enter your answer as a positive value.) |
(Click to select)GainLoss | $ |
d-2 | What is your net gain or loss if Macrosoft is selling For $32 at expiration? (Enter your answer as a positive value.) |
(Click to select)LossGain | $ |
d-3 | What is the break-even stock price? (Round your answer to 2 decimal places, (e.g., 32.16).) |
Break-even | $ |
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