Refer to Figure 15.1, which lists the prices of various IBM options. Use the dat
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Question
Refer to Figure 15.1, which lists the prices of various IBM options. Use the data in the figure to calculate the payoff and the profit/loss for investments in each of the following Sep-11 expiration options, assuming that the stock price on the expiration date is $165. (Leave no cells blank - be certain to enter "0" wherever required. Loss amounts should be indicated by a minus sign. Round "Profit/Loss" to 2 decimal places. Your answer should be for one share.)
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Payoff Profit/Loss a. Call option, X = 160 ?? ?? b. Put option, X = 160 ?? ?? c. Call option, X = 165 ?? ?? d. Put option, X = 165 ?? ?? e. Call option, X = 170 ?? ?? f. Put option, X = 170 ????
FIGURE 15.1 IBM IBM) Undelyingstock prke: 166.76 en Interest 4298 7443 4920 Options on IBM, August 24, 2011 Soure: Te Wall Street Jonal Cnlns August 25, 2011 Reprinted by permission of The Wll &treet; Journal Copyright© 2011 Dow Jones & Compary, Irr. All Rights Reserved Worldwide. Call Put Last Volume Open Interest Expiration Strike ep 2011 Oct 2011 796 301 101 1835 2.62 2369535 7890 9.40 ast Volume 1271 296 102 160.00 9.15 160.00 11.95 Jan 2012 160.00 15.00 Apr 2012 160.007.35 122 13.30 3542 4.10 3866 7.00 4045 10.85 5085 2651 4466 54 12436 4584 2929 52 Sep 2011 Oct 2011 an 2012 165.00 165.00 5.801805 329 93 58 3.00 3053 457 73 36 8. 70 165.00 11.70 Apr 2012 165.0014.30 131 303 781 5.86 8.93 Apr 2012 170.00 11.32 Sep 2011 Oct 2011 Jan 2012 170.00 170.00 170.00 7506 9.25 6876 13.00 79596.20 2744 148 58 58Explanation / Answer
Cost Payoff Profit/Loss A) Call option, X = 160 9.15 5 - 4.15 B) Put option, X = 160 2.62 0 -2.62 C) Call option, X = 165 5.80 0 -5.80 D) Put option, X = 165 4.10 0 -4.10 E) Call option, X = 170 3 0 -3 F) Put option, X = 170 6.20 5 -1.20
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