A Canadian investor owns 300 shares of Scotiabank (BNS) and wants to protect herself against a...

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A Canadian investor owns 300 shares of Scotiabank (BNS) and wants to protect herself against a large drop in the stock's price between now and the end of the year. i. ii. iv. V. vi. Should she buy BNS stock put options or call options? To protect herself with a maximum loss of about 10% below the current market price, what strike price should she choose? What expiry date should she choose? How many contracts would she need to buy? How much would it cost her to acquire this hedge based on the "ask" price of the options? (ie what would be the total cost of the option contract(s) premium?) Attach a screenshot of the appropriate option's trading price. What is the current price of Scotiabank (BNS) shares and what are her 300 shares currently worth? What percentage of that value would she have to spend to hedge with options? A Canadian investor owns 300 shares of Scotiabank (BNS) and wants to protect herself against a large drop in the stock's price between now and the end of the year. i. ii. iv. V. vi. Should she buy BNS stock put options or call options? To protect herself with a maximum loss of about 10% below the current market price, what strike price should she choose? What expiry date should she choose? How many contracts would she need to buy? How much would it cost her to acquire this hedge based on the "ask" price of the options? (ie what would be the total cost of the option contract(s) premium?) Attach a screenshot of the appropriate option's trading price. What is the current price of Scotiabank (BNS) shares and what are her 300 shares currently worth? What percentage of that value would she have to spend to hedge with options?

Answer rating: 100% (QA)

Hedging Scotiabank BNS with Put Options i Put Options The investor should buy put options to protect against a large drop in the stock price Put optio... View the full answer