a. An investor owns 100,000 shares of Micron. He considers hedging his position with a protective put.
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Question:
a. An investor owns 100,000 shares of Micron. He considers hedging his position with a protective put. He considers the 55 strike or the 47.50 strike to be held to maturity. Show the investor the cost, break-even and potential loss of either option. Use the Ask for cost of purchase.
b. The investor changes his mind, given a special Micron imminent announcement he wants a very short-term hedge (about a day). How many contracts should he buy of the 55 strike? Repeat with the 47.5 strike?
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Taxes And Business Strategy A Planning Approach
ISBN: 9780132752671
5th Edition
Authors: Myron Scholes, Mark Wolfson, Merle Erickson, Michelle Hanlon
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