2. Use the option quote information shown here to answer the questions that foll

Question

2. Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $41.
  
                   Calls Puts
Option and   

NY Close   Expiration StrikePrice   Vol.   Last      Vol.   Last

Macrosoft                                                        
       Feb      43         99         1.63            54         2.63     
       Mar      43         75         1.87            36         3.04     
       May      43         36         2.15            25         3.46     
       Aug      43         17         2.36            17         3.50     
  
a.  
Suppose you buy 24 contracts of the February 43 call option. How much will you pay, ignoring commissions? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Cost   $
  
  
Suppose you buy 24 contracts of the February 43 call option and Macrosoft stock is selling for $44 per share on the expiration date.

b-1.   How much is your options investment worth? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Payoff   $
  
  
b-2.   What if the terminal stock price is $43? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Payoff   $
  

Suppose you buy 24 contracts of the August 43 put option.

c-1.   What is your maximum gain? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Maximum gain   $
  

c-2.  
On the expiration date, Macrosoft is selling for $37 per share. How much is your options investment worth? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Position value   $
  
  
c-3.   On the expiration date, Macrosoft is selling for $37 per share. What is your net gain? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Net gain   $
  

Suppose you sell 24 of the August 43 put contracts.
  
d-1.  
What is your net gain or loss if Macrosoft is selling for $38 at expiration? (A loss amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
   $
  
  
d-2.  
What is your net gain or loss if Macrosoft is selling for $45 at expiration? (A loss amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
   $
  

d-3.  
What is the break-even price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
  
Break-even   $
  

Explanation / Answer

24 contracts x $1.63/share x 100 shares/contract = $3912

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