w 09 Option Hedging Strategies - HANDOUT_6-1,2 [Compatibility Mode] Q- Search in Document Home Insert Design Layout References Mailings Review View + Share A A A AaBCDE AaBbCcDdEt AaBbCcDc AaBbCcDc AaBbCcDdEe da BhCcDdEx Paste B I Uabe Normal No Spacing Heading 1 Title Subtitle Subtle Emph Styles Pane Activate Office to Create and Edit Buy Office or sign in to activate Office if you've already bought it. Activate Option Hedging Strategies - Handout 6-1,2 1. Harold buys 1,000 ANZ shares at a price of $8.47 and decides to construct a hedge using an equal number of put options, with an exercise price of $8.75 and a cost of 40c per option. Ignoring the time difference between the purchase or sale of the option and its expiry: i) construct a clearly labelled diagram showing the expiry profit as a function of share-price, from the hedged position. ii) calculate the profit for the expiry share-prices of $8.25 and $9.00. 2. Shirley buys 1,000 ANZ shares at a price of $8.47 and decides to construct a hedge using an equal number of call options with an exercise price of $7.50, and a cost of $1.00 per option. Ignoring the time difference between the purchase or sale of the option and its expiry: .i) construct a clearly labelled diagram showing the expiry profit as a function of share-price, from the hedged position. ii) calculate the profit for the expiry share-prices of $8.00 and $8.75. Page 1 of 1 172 Words English (AUS)