1. You own a call option with a strike price of $27.50.What is your payoff on this option contract if the underlying stockis selling for $31.20 on the option expiration date?

The payoff amount is the amount that they are receivingfor their option not their gain or loss. Several questionsask for the payoff amount.

2. You purchased 5 call options with a $37.50 strike priceand a call premium of $1.35. On the expiration date, the underlyingstock was priced at $37.30. What is the percentage returnon your investment?

3. You buy a put with a strike price of $50 and an optionpremium of $2.20. You simultaneously buy the stock at a price of$50 a share. What is your profit per share onthese transactions if the stock price at expiration is$55.19?

4. Sun Lee purchased 4 put option contracts on JeffersonCentres Stores. The option premium was $.45 and the strike pricewas $27.50. On the expiration date, Jefferson stock was selling for$28.15 a share. What is the payoff on the optioncontracts?

5. Monika purchased 5 put option contracts at an optionpremium of $1.20 and a strike price of $52.50. At expiration, thestock price was $46.80. What is Monika's percentagereturn?

6. Gerold purchased 8 put option contracts on EastwardBound stock at a strike price of $36. The option premium was $.90.At expiration, Eastward stock was valued at $36.40 a share.What is Gerold's percentage return?

7. Travis purchased a put option with a strike price of$65. He paid a total of $250 for the contract. What is hisbreak-even stock price? You have to dividethe dollar amount by 100 (since he only bought 1 contract) to getthe cost per share.

8. You own 100 shares of Hi-Tek stock which are currentlyvalued at $64 a share. You just paid an option premium of $1.50 tobuy one put contract on Hi-Tek with a strike price of $65.Basically, you just paid $1.50 per share to eliminate thepossibility of losing as much as _____ a share.

09. Russ paid $350 to purchase 5 call options with a strikeprice of $42.50. What is the break-even stock price?
A. $41.60
B. $41.80
C. $43.10
D. $43.20
E. $43.50

10. Which one of the following options isin-the-money?
A. call with a $45 strike and an underlying stock price of$42
B. put with a $35 strike and an underlying stock price of$36
C. call with a $15 strike and an underlying stock price of$15
D. put with a $45 strike and an underlying stock price of$42
E. call with a $30 strike and an underlying stock price of$29

11. Jennifer purchased 5 put option contracts on WinslowMfg. stock. The option premium was $0.20 and the strike price was$17.50. On the expiration date, the stock was selling for $17.75 ashare. What is the total payoff on the optioncontracts?
A. -$100
B. -$50
C. $0
D. $50
E. $150

12. You purchased 7 put option contracts on AltoIndustries. The strike price was $42.50 and the option premium was$1.30. On the expiration date, the stock was valued at $41.40 ashare. What is the payoff on the option contracts?
A. -$140
B. $0
C. $110
D. $360
E. $770

13. You purchased a call option with a $22.50 strike priceand a call premium of $0.30. On the expiration date, the underlyingstock was priced at $23.40 per share. What is the percentage returnon your investment?
A. -100 percent
B. 0 percent
C. 50 percent
D. 100 percent
E. 200 percent

14. You purchased a put with a strike price of $35 and anoption premium of $0.45. You simultaneously bought the stock at aprice of $34 a share. What is your profit per share on thesetransactions if the stock price at expiration is$33.50?
A. -$1.15
B. -$0.15
C. $0.15
D. $0.35
E. $0.55

15. A 6-month call has a strike price of $30. Theunderlying stock is priced at $32.80 and the option premium on thecall is $3.40. What is the per share time value of thecall?
A. $0.00
B. $0.60
C. $1.40
D. $2.80
E. $3.60

16. A 6-month put has a strike price of $32.50. Theunderlying stock's price is $31.10. What is intrinsic value of thisput?
A. $0.00
B. $0.70
C. $1.40
D. $2.10
E. $2.80

17. Explain how options can be used to manage risk. Providean example using a call option and another example using a putoption.

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Lets go through each of the options problems one by one and calculate the relevant values or provide explanations Payoff of Call Option Strike Price of Call Option 2750 Stock Price on Expiration 3120 ... View the full answer