Question: as detailed as possible! thx! Using the information below from the FT answer the following question. SHORT STERLING OPTIONS (Euronext.liffe) 500,000 100 - rate Strike

 as detailed as possible! thx! Using the information below from the

as detailed as possible! thx!

Using the information below from the FT answer the following question. SHORT STERLING OPTIONS (Euronext.liffe) 500,000 100 - rate Strike price CALLS ...... PUTS Mar 21 Apr May Jun Apr May Jun 94750 0.190 0.195 0.205 0.005 0.015 94875 0.080 0.095 0.110 0.015 0.030 0.045 95000 0.020 0.035 0.045 0.080 0.095 0.105 95125 0.005 0.015 0.185 0.190 0.200 95250 0.005 0.310 0.310 0.315 95375 0.435 0.435 0.435 Est. vol. total, Calls 45,800 Puts 28,601 . Previous day's open interest, Calls 3,362,136 Puts 773,234 . Today is the 21st of March. If you are due to invest 50 million in June for three months and you want to achieve a minimum rate on your investment and use the 95125 option. The tick value is 12.50, and the contract value is 500,000. i. Set up the hedge required at 21st March? ii. Draw a graph illustrating this position, highlighting the maximum and minimum rates on your investment and the premium on the option. The graph required is an option payoff chart. iii. Express the value of this option in terms of time value and intrinsic value if the price of the underlying June future contract is 94.94? iv. Illustrate the cashflows on the investment and the option if the interest rate on the expiry of the option is 4.2% with a futures price of 95.8. Using the information below from the FT answer the following question. SHORT STERLING OPTIONS (Euronext.liffe) 500,000 100 - rate Strike price CALLS ...... PUTS Mar 21 Apr May Jun Apr May Jun 94750 0.190 0.195 0.205 0.005 0.015 94875 0.080 0.095 0.110 0.015 0.030 0.045 95000 0.020 0.035 0.045 0.080 0.095 0.105 95125 0.005 0.015 0.185 0.190 0.200 95250 0.005 0.310 0.310 0.315 95375 0.435 0.435 0.435 Est. vol. total, Calls 45,800 Puts 28,601 . Previous day's open interest, Calls 3,362,136 Puts 773,234 . Today is the 21st of March. If you are due to invest 50 million in June for three months and you want to achieve a minimum rate on your investment and use the 95125 option. The tick value is 12.50, and the contract value is 500,000. i. Set up the hedge required at 21st March? ii. Draw a graph illustrating this position, highlighting the maximum and minimum rates on your investment and the premium on the option. The graph required is an option payoff chart. iii. Express the value of this option in terms of time value and intrinsic value if the price of the underlying June future contract is 94.94? iv. Illustrate the cashflows on the investment and the option if the interest rate on the expiry of the option is 4.2% with a futures price of 95.8

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