What factors influence a speculative premium on an option?
Answer to relevant QuestionsWhy would a high-beta stock often have a greater speculative premium than a low-beta stock? Assume a 40 July put option is purchased for 6.50 on a stock selling at $35 per share. If the stock ends up on expiration at 38.75, what will be the value of the put option? Assume an investor writes a call option for 100 shares at a strike price of 30 for a premium of 5.75. This is a naked option. a. What would the gain or loss be if the stock closed at 26? b. What would the break-even point be ...Maxwell Securities buys a $100,000 par value, September 2010 Treasury bond contract at the quoted settle price in Table 15–8 on page 404. a. What is the dollar value of the contract? Use the settle price in your ...Referring to problem 7, how many contracts would need to be controlled to generate enough profit for a new margin contract if the price changed by only 1¢ per bushel?
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