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  • Practice Questions On Ch14 (Options)

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    Bending Existence
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    This document provides 6 practice problems on drawing profit-loss diagrams for various option positions, including long calls, long puts, covered calls, and protective puts. Students are instructed to identify the maximum profit, maximum loss, and break-even stock price for each position. A series of problems are presented involving calls and puts on Apple stock with differing strike prices and time durations. Links to similar practice problems on Chegg are also provided.

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    Practice Questions on Ch14 (Options)

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    This document provides 6 practice problems on drawing profit-loss diagrams for various option positions, including long calls, long puts, covered calls, and protective puts. Students are instructed to identify the maximum profit, maximum loss, and break-even stock price for each position. A series of problems are presented involving calls and puts on Apple stock with differing strike prices and time durations. Links to similar practice problems on Chegg are also provided.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    46 views2 pages

    Practice Questions On Ch14 (Options)

    Uploaded by

    Bending Existence
    This document provides 6 practice problems on drawing profit-loss diagrams for various option positions, including long calls, long puts, covered calls, and protective puts. Students are instructed to identify the maximum profit, maximum loss, and break-even stock price for each position. A series of problems are presented involving calls and puts on Apple stock with differing strike prices and time durations. Links to similar practice problems on Chegg are also provided.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    Practice Questions on Ch 14:

    Make sure you identify the maximum loss, maximum gain and break-even stock price for the position
    or positions!

    Problem 1. Draw the profit-loss diagram of the following option position:

    a) S0 (Spot price now) = $55, K (Strike Price) = $61, t = 6 month, Long call, C 0 = $3

    b) S0 (Spot price now) = $55, K (Strike Price) = $55, t = 6 month, Long call, C 0 = $4

    c) S0 (Spot price now) = $55, K (Strike Price) = $50, t = 6 month, Long call, C 0 = $9

    Problem 2. Draw the profit-loss diagram of the following option position:

    a) S0 (Spot price now) = $55, K (Strike Price) = $50, t = 6 month, Long put, P 0 = $2.50

    b) S0 (Spot price now) = $55, K (Strike Price) = $55, t = 6 month, Long put, P 0 = $4

    c) S0 (Spot price now) = $55, K (Strike Price) = $60, t = 6 month, Long put, P 0 = $6

    Problem 3. Draw the profit-loss diagram of the following positions on Apple Stock:
    Own stock at S0 (Spot price now) = $178 and buying the following put with
    K (Strike Price) = $165, t = 2 month, P = $5

    Problem 4. Draw the profit-loss diagram of the following positions on Apple Stock:
    Own stock at S0 (Spot price now) = $178 and buying the following put with
    K (Strike Price) = $185, t = 2 month, P = $14

    Problem 5. Draw the profit-loss diagram of the following positions on Apple Stock:
    Own stock at S0 (Spot price now) = $178, and selling the following call with
    K (Strike Price) = $200, t = 2 month, C = $3.50

    Problem 6. Draw the profit-loss diagram of the following positions on Apple Stock:
    Own stock at S0 (Spot price now) = $178, and selling the following call with
    K (Strike Price) = $170, t = 2 month, C = $16
    https://www.chegg.com/homework-help/questions-and-answers/problem-3-gold-quotes-nov-1st-2019-
    follows-spot-price-1-4715-oz-february-futures-1-48103-o-q75991131

    https://www.chegg.com/homework-help/questions-and-answers/problem-5-draw-profit-loss-diagram-
    following-positions-identify-breakeven-price-maximum-lo-q78117422

    https://www.chegg.com/homework-help/questions-and-answers/problem-4-3-points-draw-profit-loss-
    diagram-following-positions-identify-break-even-price--q78130004

    https://www.chegg.com/homework-help/questions-and-answers/suppose-market-price-share-apple-
    inc-175-exists-call-put-option-apple-stock-strike-price-1-q114113330

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