Homework Assignment-Stock Options Calls Puts Strike Close Price Expiration Vol.
ID: 2797077 • Letter: H
Question
Homework Assignment-Stock Options
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 10.10
Suppose you buy 50 February 100 put option contracts.
What is your maximum gain?
On the expiration date, Hendreeks is selling for $87.45 per share. How much is your options investment worth? What is your net gain?
A call option is currently selling for $5.30. It has a strike price of $60 and six months to maturity. A put option with the same strike price sells for $7.80. The risk-free rate is 4.3 percent, and the stock will pay a dividend of $2.80 in three months. What is the current stock price?
Suppose you buy one SPX call option contract with a strike of 1,300. At maturity, the S&P 500 Index is at 1,321. What is your net gain or loss if the premium you paid was $14?
Explanation / Answer
Maximum gain in put is when stock price becomes zero hence maximum gain=100*50=5000
Option Investment is worth (100-87.45)*50=627.5
net gain is 627.5-50*2.4=507.5
According to put call parity
S+P-PV(Dividends)=Xe^(-rt)+C
=>S=Xe^(-rt)+C-P+PV(Dividends)
=>S=60*e^(-4.3%*6/12)+5.3-7.8+2.8e^(-4.3%*3/12)=58.99383
Current stock price=58.99383
Net gain=(1321-1300)-14=7 per option
as contract is for 100 options, net gain=7*100=700
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