In Problem 14, suppose JC Penney stock sells for $8 per share immediately before your options?? expiration. What is the rate of return on your investment? What is your rate of return if the stock sells for $10 per share (think about it)? Assume your holding period for this investment is exactly three months.

Data From Problem 14

If you wanted to purchase the right to sell 2,000 shares of JC Penney stock in November 2015 at a strike price of $9 per share, how much would this cost you?

Transcribed Image Text:

Calls Strike Open mpled Volatity Contract Name Last Bid Ask Change %Change Volime nteraet Fiter 8.00 JGP151127C0000B000 1.62 1.79 1.89 0.00 0.00% 12 20 56.45% 9.00 JCP151127C000090 0.98 1.00 1.10 0.00 0.00% 51.95% 9.50 JCP151127CO0009500 0.74 0.69 0.78 0.00 0.00% 13 50 50.00% 10.00 JCP151127C00010000 0.40 0.44 0.48 0.00 0.00% 24 105 45.12% 10.50 JCP151127C00010500 0.28 0.26 0.29 0.03 12.00% 19 47 43.75% 11.00 JCP151127C00011000 0.16 0.15 0.18 -0.01 -5.88% 51 41 44.34% Puts Strike Open hteroet mpled Volatity Contract Name Last Bid Ask Change %Change Valume * Fiter 7.00 JCP151127P0007000 0.06 0.03 0.08 D.00 0.00% 24 24 67.58% 8.50 JCP151127PO008500 0.31 0.18 0.21 D.00 0.00% 53.13% 9.00 JCP151127PODD9000 0.41 0.29 0.33 D.00 0.00% 10 10 50.20% 9.50 JCP151127P00009500 0.65 0.47 0.50 D.00 0.00% 32 83 49.22%