Suppose you buy 55 February 100 call option contracts. Hendreeks stock is sellin
ID: 2768452 • Letter: S
Question
Suppose you buy 55 February 100 call option contracts. Hendreeks stock is selling for $106.70 per share on the expiration date. How much is your options investment worth? What if the stock price is $102.60 on the expiration date? (Do not round intermediate calculations. Omit the "$" sign in your response.)
Calls Puts Strike Close Price Expiration Vol. Last Vol. Last Hendreeks 103 100 Feb 72 5.20 50 2.40 103 100 Mar 41 8.40 29 4.90 103 100 Apr 16 10.68 10 6.60 103 100 Jul 8 14.30 2 10.10Explanation / Answer
I have bought 55 Feb 100 call option Contracts by paying $5.20 per option
Thus total premium paid= 55*5.20=$286
Stock is trading at $106.7 but I will get it at $100 So profit = (106.7-100)*55
Profit earned by less share price =$368.5
Options payoff @106.7= Profit earned by less share price - Premium Paid
=368.5-286
Options payoff @106.7=$82.5
Premium paid is constant in second case also
Stock is trading at $102.6 but I will get it at $100 So profit = (102.6-100)*55
Profit earned by less share price =$143
Options payoff @106.7= Profit earned by less share price - Premium Paid
=143-286
=-143
Options Payoff @102.6= -$143
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