Turn back to Figure 20.1, which lists prices of various IBM options. Use the data in the
Question:
Turn back to Figure 20.1, which lists prices of various IBM options. Use the data in the figure to calculate the payoff and the profits for investments in each of the following February expiration options, assuming that the stock price on the expiration date is $195.
a. Call option, X = $190.
b. Put option, X = $190.
c. Call option, X = $195.
d. Put option, X = $195.
e. Call option, X = $200.
f. Put option, X = $200
Figure 20.1
PRICES AT CLOSE JANUARY 18, 2013 Underlying Stock Price: 194.47 Put Open Open Expiration Strike Last Volume Interest Last Volame Interest on Fab 185 10.60 299 185 185 4.35 07 2431 0.7630 2488 21.82 710 3645 2.004 706 3.60 104 2047 37 134 6.5 0 440 815 5697 15 50 2496 90 675 402 2808 3.00 3553 10377 190 8.85 0 1866 5.20 527 2177 6 1142 on Fab 190 10.95 195 15 845 8.54 on Fab 001 2451 11718 0.70 4090886 65 1337 11902 5.00 860 3156 5.90 1785 2928 .30 934 114 22 3419 10 1248 2966 5.55 637 6199 1.61 1053 5530 8.09 546 967 200 370 629 3236 10.05 375 1903 1105 195 195 845 13 5773 10.B5 tiu Fab eb 200 80 1257
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Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
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