Please show calculations on the following questions based on listed option quota
ID: 2752449 • Letter: P
Question
Please show calculations on the following questions based on listed option quotations in the Wall Street Journal.
Call Put
Price Strike Expir. Vol. Last Vol. Last
14.36 12.50 Jun 372 3.35 5368 1.50
14.36 15.00 Jun 55 1.15 652 2.21
14.36 15.00 Sep 1852 4.05 532 3.75
14.36 17.50 Sep 1819 1.90 40 2.30
Suppose you write a September $17.50 call. What would be your profit or loss in October given the following stock prices in September?
$15.12
S19.45
$24.12
$29.14
You write an October $32.50 call option at a premium of $4.50.What would be your profit or loss given the following stock price in October?
$20.12
$31.45
$36.50
$44.12
Explanation / Answer
Writing a September call for $ 17.50
Premium 2.30
Profit and loss when the stock price is
a.15.12
Profit/Loss = 2.30
Option buyer will not exercise the option if the market price is below strike price and hence the option premium will be profit for writer.
b.19.45
Profit=Strike-Spot +Premium=17.50-19.50+2.30=0.30
c.24.12
Profit=17.50-24.12+2.30=-8.92
Loss 8.92
d. 29.14
Loss =17.50-29.14+2.30=13.94
Writing an October call option for 32.50 at premium 4.5 $
a.20.12
Profit =4.5 $
Here the buyer will not exercise the option as the market price is less than strike price.
b.31.45
Profit=4.5
Here the buyer will not exercise the option as the market price is less than strike price.
c.36.50
Loss=Spot price-Strike price +Premium
Loss=36.50-32.50+4.5=8.5
d.44.12
Loss=Spot price –Strike price +Premium
Loss =44.12-32.50+4.5=16.12
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