Consider the following information on put and call options for Citigroup. Strike

Question

Consider the following information on put and call options for Citigroup.

Strike Price

Put Price

Call Price

$32.50

$2.85

$1.65

Calculate the net value of a protective put position at a stock price at expiration of $20. (5 points)

Calculate the net value of a covered call position at a stock price at expiration of $45. (5 points)

Calculate the payoffs of a short straddle at a stock price at expiration of $20 and a stock price at expiration of $45 (5 points)

Strike Price

Put Price

Call Price

$32.50

$2.85

$1.65

Explanation / Answer

             Call price = 1.65

            Strike price= 32.5

            Put price = 2.85

            Stock price = 20

            Strike price= 32.5

            Put price = 2.85

                        net value of a protective put position at a stock price at expiration of $20

=(strike price - stock price) - put price +stock price

=(32.5

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