Calls Puts Strike Close Price Expiration Vol. Last Last 100 100 100 Vol Hendreek

Question

Calls Puts Strike Close Price Expiration Vol. Last Last 100 100 100 Vol Hendreeks Feb Mar Apr Jul 5.20 8.40 10.68 103 72 50 2.40 103 29 4.90 10 10.10 103 6.60 100 103 14.30 Suppose you buy 50 February 100 put option contracts 1. 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? 2. A call option is currently selling for S5.30. It has a strike price of S60 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? 3. 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

1
Strike 100 Puts Feb last price is 2.4
Maximum gain=50*(100-2.4)=4880
Options investment is worth 50*(100-87.45)=627.5
Net gain=627.5-50*2.4=507.5

2
Put call pairty states that
S+P-Present Value of Dividends=C+Xe^(-rt)
=>S=C+Xe^(-rt)-P+Present Value of dividends
=>S=5.8+60*e^(-4.3%*6/12)-7.8+2.8*e^(-4.3%*3/12)
=>S=59.49383

3
1 contract is for 100 options
hence net gain=100*(1321-1300)-100*14=700

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.