a. The following information regarding option quotes is available in January for Wattle Ltd: XX January...
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a. The following information regarding option quotes is available in January for Wattle Ltd: XX January 20XX Wattle Ltd Last sale price = $22.00 Strike Price $23.00 May $1.05 Calls Last June $1.25 August 1.35 May $1.42 Puts - Last June $1.65 i. Is the June put option now in the money? Why? Show all calculations for one contract. August $1.95 ii. If you buy 10 May call options, what will be your net loss or gain if on expiry Wattle share prices are selling for $25.00 per share? b. It is January 20XX, a cattle farmer anticipates buying 4,000 cattle in September, 20XX. Assume a cattle futures contract is for 2,000 cattle and the price today of a September 20XX futures contract is $420 an animal. The farmer decides to hedge all of his intended purchase, so as to protect himself from rises in the cattle price between now and purchase time. Assume that In September, 20XX, the auction price of cattle is $434 each and the June futures contract is trading at $432 a head. Calculate the value of the farmer's net purchase cost in September 20XX, including the profit or loss from his futures trading. Show all calculations. a. The following information regarding option quotes is available in January for Wattle Ltd: XX January 20XX Wattle Ltd Last sale price = $22.00 Strike Price $23.00 May $1.05 Calls Last June $1.25 August 1.35 May $1.42 Puts - Last June $1.65 i. Is the June put option now in the money? Why? Show all calculations for one contract. August $1.95 ii. If you buy 10 May call options, what will be your net loss or gain if on expiry Wattle share prices are selling for $25.00 per share? b. It is January 20XX, a cattle farmer anticipates buying 4,000 cattle in September, 20XX. Assume a cattle futures contract is for 2,000 cattle and the price today of a September 20XX futures contract is $420 an animal. The farmer decides to hedge all of his intended purchase, so as to protect himself from rises in the cattle price between now and purchase time. Assume that In September, 20XX, the auction price of cattle is $434 each and the June futures contract is trading at $432 a head. Calculate the value of the farmer's net purchase cost in September 20XX, including the profit or loss from his futures trading. Show all calculations.
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a i Calculate the June put money now in the money or not Why To determine if the June put option is ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
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