An investor writes a call option, for which the premium = $3. Assuming the strike price is
Question:
An investor writes a call option, for which the premium = $3. Assuming the strike price is $30, provide a P/L, net P/L chart, and a graph outlining price vs. profit.
Q3: A company buys 200 oat futures contracts (5,000 bushels/contract) at $6.00/bushel. At the expiration of the contract, oat futures are worth $6.25/bushel. Calculate the P/L for the long and short positions, and show why the agreement is a zero-sum arrangement.
Q4: A large jewelry organization is long 20 silver futures contracts (5,000 troy ounces/contract), for which they paid a per ounce price of $24.90. At the expiration of the contract, silver futures are worth $25.20 per ounce. Calculate the P/L for the long and short positions, and show why the agreement is a zero-sum arrangement.
Q5: Fill out the chart below (i.e., indicate ATM, ITM or OTM):
Option types | Strike price ($) | Stock price ($) | ATM, ITM or OTM |
Call | 57 | 52 | |
Put | 72 | 87 | |
Call | 65 | 65 | |
Put | 42 | 42 | |
Call | 43 | 55 | |
Put | 81 | 74 |
Fundamentals of Investment Management
ISBN: 978-0078034626
10th edition
Authors: Geoffrey Hirt, Stanley Block