Would anyone be able to explain how to solve for each thing and what I would nee
ID: 2751152 • Letter: W
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Would anyone be able to explain how to solve for each thing and what I would need to solve for them? I have the information for the stocks but I can't fit it here. Any information about equations or how I can solve for these would be SOOOO appreciated. I am so lost.
Table 2. Covered Equity Call/Put Writing with individual stock options Income Write 2 AA APR- 12 Calls at 4.10 _____ Write 1 AAPL APR- 330 Call at 8.8 _____ Write 3 BP APR- 48 Puts at 2.98 _____ Write 2 PFE APR -19 Call at 1.24 _____ Write 3 WMT APR- 52.5 Calls at 1.33 _____ Total _____ Market UP 3% Stock Theoretical Price Stock Gain Option Income Total Alcoa Inc (AA) _____ _____ _____ _____ Apple Inc (AAPL) _____ _____ _____ _____ BP PLC (BP) _____ _____ _____ _____ Pfizer Inc (PFE) _____ _____ _____ _____ Wal-Mart Stores Inc (WMT) _____ _____ _____ _____ Total _____ _____ _____ _____Explanation / Answer
Then Income for Write 2 AA APR- 12 Calls at 4.10=2*4.10=8.2
similarly Write 1 AAPL APR- 330 Call at 8.8=2*8.8=17.6
Thus calculate income this way given u have premiums.
If you have the stock price information then use it ,is St is the market value of Stock.
Now marke up the stock prices from data for given stocks to 3% to get Theoretical Price and stock gain as 3% of price before rise.Call Option Income=premium-payoff+Stock price gain/loss
Call Option Income=premium-max(Theoretical Price-strike price,0)+Stock gain
e.g.Call 2 AA APR- 12 Calls at 4.10 Option Income=4.10-max(Theoretical Price-12,0)+Stock gain
Put Option Income=premium-max(strike price-Theoretical Price,0)-Stock gain
3 BP APR- 48 Puts at 2.98 Option Income=2.98-max(48-Theoretical Price,0)-Stock gain
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