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Your portfolio consists of 2 shares of Stock XYZ and 2 short call options on XYZ with a strike price 600 and 1 long call option on XYZ with a strike price 1400. Both options expire in 6 months. The current price of XYZ is 1000. What is the payoff of your portfolio in 6 months when the stock price in 6 months turns out to be (1) S6m =500; (2) S6m -1000; and (3) Som=1500? [10 points for each] Hint: Suppose you own 100 shares of Apple in your portfolio, then the value of your portfolio at time t should be 100*the price of APPL at time t. Your portfolio consists of 2 shares of Stock XYZ and 2 short call options on XYZ with a strike price 600 and 1 long call option on XYZ with a strike price 1400. Both options expire in 6 months. The current price of XYZ is 1000. What is the payoff of your portfolio in 6 months when the stock price in 6 months turns out to be (1) S6m =500; (2) S6m -1000; and (3) Som=1500? [10 points for each] Hint: Suppose you own 100 shares of Apple in your portfolio, then the value of your portfolio at time t should be 100*the price of APPL at time t.
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To calculate the payoff of your portfolio in 6 months for each of the three scenarios you need to co... View the full answer
Related Book For
Fundamentals of Analytical Chemistry
ISBN: 978-0495558286
9th edition
Authors: Douglas A. Skoog, Donald M. West, F. James Holler, Stanley R. Crouch
Posted Date:
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