What is meant by the exercise or strike price on an option?
Answer to relevant QuestionsWhat factors influence a speculative premium on an option? In problem 10, what would be the overall gain or loss if the stock ended up at a. $41 b. $25 c. $57 d. $70 [Disregard the stock being called away in parts a, c, and d. Assume you will repurchase the options.] Assume on May 1 you are considering a stock with three different expiration dates for the 60 call options. The percentage of the speculative premium for each date is as follows: May....... 2.8% August....... ...You purchase a 5,000-bushel contract for corn at $1.90 per bushel ($9,500 total). The initial margin requirement is 7 percent. The price goes up to $1.98 in one month. What is your percentage profit and the annualized gain? If contracts are written on a 5,000-bushel basis requiring $3,000 of margin and you control 12 contracts, how much would the price per bushel have to change to generate enough profit to purchase an additional contract?
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