3,4,5,6,14,22,27
3.)
S = 61.12
x = 55
Call option: 7.25
$725
4)
a.
Call option, X = 135
Payoff 140 - 135 = $500
Profit 5 - 6.78 = -178
b.
Put option, X = 135
Payoff = 0
Profit = -189
c.
Call option, X = 145
Payoff = 0
Profit = 150
d.
Put option, X = 145
Payoff = 145-140 = 500
Profit = 5 - 6.65 = -165
5)
$140 - 0 - 5.30 = $13,470
6)
40 + 4.5 = $44.50
14)
a.
b.
c.
d.
Sell a straddle because you are betting on stability (buy for volatility)
Shorting a straddle → price of the premiums 4+7 * 100 = $1,100
If it falls below 39 or goes above 61 → lose money, it cannot move $11.
Purchase call at $7
Write a put $-4
Lend $50
e. 53
22)
a.
b.
See Graph Image below
Selling Call: -145 +140 + 3.60 = $-140
Buying Put: 0 + 6.65 = 665
Profit = $525
-150 + 140 + 3.6 = -640
0 + 6.65 = 665
Profit = $25
c. Call Strike: $140 +(3.6+6.65) = 150.25
Put Strike: 145 -(3.6+6.65) = $134.75
d. Take advantage of stock being in a certain range by selling call and put
27)
a.
b.
c.
d.
See Graph
See Graph
Breakeven is difference between premiums plus strike price. 50+6 = 56
Bullish because you want it to go up