Question: Calculating Payoffs Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $114. a. Suppose you

Calculating Payoffs Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $114.

a. Suppose you buy 10 contracts of the February 110 call option. How much will you pay, ignoring commissions?

b. In part (a), suppose that Macro soft stock is selling for $130 per share on the expiration date. How much is your options investment worth? What if the terminal stock price is $118? Explain.

c. Suppose you buy 10 contracts of the August 110 put option. What is your maximum gain on the expiration date, Macro soft is selling for $104 per share. How much is your options investment worth? What is your net gain?

d. in part (c), suppose you sell 10 of the August 110 put contracts. What is your net gain or loss if Macro soft is selling for $103 at expiration for $132? What is the break-even price??that is, the terminal stock price that results in a zero profit?

Option and NY Close Calls Last Puts Strike Price Expiration Vol. Vol.

Option and NY Close Calls Last Puts Strike Price Expiration Vol. Vol. Last Macrosoft 110 8.05 Feb Mar 85 40 1.05 9.30 110 110 1.95 3.35 61 22 May Aug 11.65 13.70 11 22 3. 5.15 110

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