You have shorted a put option on Ford stock with a strike price of $12. When...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You have shorted a put option on Ford stock with a strike price of $12. When you sold (wrote) the put, you received $5. The option will expire in exactly six months' time. a. If the stock is trading at $5 in six months, what will your payoff be? What will your profit be? b. If the stock is trading at $22 in six months, what will your payoff be? What will your profit be? c. Draw a payoff diagram showing the value of the put at expiration as a function of the stock price at expiration. d. Redo c, but instead of showing payoffs, show profits. a. The payoff of the short is S,and the profit of the short is $ (Round to the nearest dollar.) You have shorted a put option on Ford stock with a strike price of $12. When you sold (wrote) the put, you received $5. The option will expire in exactly six months' time. a. If the stock is trading at $5 in six months, what will your payoff be? What will your profit be? b. If the stock is trading at $22 in six months, what will your payoff be? What will your profit be? c. Draw a payoff diagram showing the value of the put at expiration as a function of the stock price at expiration. d. Redo c, but instead of showing payoffs, show profits. a. The payoff of the short is S,and the profit of the short is $ (Round to the nearest dollar.)
Expert Answer:
Answer rating: 100% (QA)
A B D E F G H K M P Q R T 1 3 Stock pric Owe Profit 4 a 3 5 2 Owe Pr... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
You own a put option on Ford stock with a strike price of $10. The option will expire in exactly six months time. a. If the stock is trading at $8 in six months, what will be the payoff of the put?...
-
You have written a put option on Diebold Inc. common stock. The option has an exercise price of $ 28 and Diebolds stock currently trades at $ 30.50. The option premium is $ 0.75 per contract. a. What...
-
You have purchased a put option on Kimberly Clark common stock. The option has an exercise price of $ 95.00 and Kimberly Clarks stock currently trades at $ 96.18. The option premium is $ 1.25 per...
-
P Corporation acquired an 80% interest in S Corporation two years ago at an implied value equal to the book value of S. On January 2, 2017, S sold equipment with a five-year remaining life to P for a...
-
The accounting records of Greggory Pharmaceuticals, Inc., reveal the following: Requirement 1. Compute cash flows from operating activities by the direct method. Also evaluate Greggorys operating...
-
The May 1, 2007, College Retirement Equity Fund (CREF) prospectus lists the following sample returns on $1 invested in two of the fund's accounts, per year Equity Index Account ($): 1.636, 1.441,...
-
Sony ('orp). launched its PlayStation 4 in late 2013. It was introduced at a price point of \(\$ 399\). At the time of introduction, a technology firm performed a tear-down of the PlayStation and...
-
Can competitors easily replicate Nokias global strategy? Why or why not? What brand of cell phone do you own? If youre living in the United States, chances are it isnt a Nokia. But if youre living...
-
What is the BCS Classification System?Of these four classes, drugs of which class will be relatively simpler to formulate, and which ones will likely be difficult? Why?
-
Find R ab in the four-way power divider circuit in Fig. 2.135 . Assume each R = 4 . ww- ww- ER ER R. :R
-
Trade receivables (N2) (N3) Trade payables Sales View Purchases Return inwards Return outwards Capital Loan from Britney Commission received Rent (1/2021-11/2021) (N6) Electricity and water...
-
O Kisho Kurokawa Okisho kurokawa Okurokawa O Kurokawa Who is the architect of this building?
-
Le manfuacturing makes products that sell for 1 0 0 per unti . The company incurs variable manufuctuting cost of 4 0 Per unit , variable selling expenses are 1 0 per unit total annual fixed coast are...
-
3. Consider the problem of computing the product of integers. That is, given an input = Aa, a a) a sequence of integers, your algorithm must output m = aa a n == n II a (0.5 point each) i=1 a. Write...
-
6. The efficiency of Carnot engine can be increased either by increasing the source temperature while sink temperature is held constant or decreasing the sink temperature while source temperature is...
-
A construction company planned for a new project and represented the tasks of the project as a list of immediate predecessors, estimated duration (best, most likely, worst) as follows: Activity...
-
hello dear tutor , please provide answer with clear solutions. Thank you so much 1.Deleon Company had decided to distribute the costs of service departments by the simultaneous (algebraic) method....
-
Select the correct answer for each of the following questions. 1. On December 31, 20X3, Saxe Corporation was merged into Poe Corporation. In the business combination, Poe issued 200,000 shares of its...
-
Assume the annual return for the lowest turnover portfolio is 18% and the annual return for the highest turnover portfolio is 12%. If you invest $100,000 and have the highest turnover, how much lower...
-
When Alfred Nobel died, he left the majority of his estate to fund five prizes, each to be awarded annually in perpetuity starting one year after he died (the sixth one, in economics, was added...
-
You have risen through the ranks of a coffee company, from the lowly green-apron barista to the coveted black apron, and all the way to CFO. A quick Internet check shows you that your companys beta...
-
What are the sources of monopoly power?
-
Describe and explain how a firm can increase its profits through price discrimination.
-
What is a monopoly?
Study smarter with the SolutionInn App