Question: How do I calculate a portoflio's return that includes put options and stocks? I'm currently calculating it as the HPR [(Strike price - final price-

How do I calculate a portoflio's return that includes put options and stocks? I'm currently calculating it as the HPR [(Strike price - final price- cost of option) x (contract size)] of the options + the HPR of the stocks [(Final price of stock-original price)x(contract size)]. The problem is that I am getting the same returns for all variations of the final price of the stock with the strike price being held constant and I know that's not correct.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

1. If a bank has a gap of -$10 million, it can reduce its interest-rate risk by A) paying a fixed rate on $10 million and receiving a floating rate on $10 million. B) paying a floating rate on $10...

Leticia has to hedge the interest rate risk of her holdings of $6,480,000 in Treasury bonds by buying or selling futures contracts. Determine the type of transaction and the price of each contract if...

I need assistance with all problems attached except 4.1 Can you assist? Case Problem 4.1 Coates's Decision On January 1, 2017, Dave Coates, a 23-year-old mathematics teacher at Xavier High School,...

Hi! You did a real good job helping me and I need you once again for FIN 402 Case Problem 4.1 Coates's Decision On January 1, 2017, Dave Coates, a 23-year-old mathematics teacher at Xavier High...

Hi. I need help with my FIN 402 work. You guys really help me out. Case Problem 4.1 Coates's Decision On January 1, 2017, Dave Coates, a 23-year-old mathematics teacher at Xavier High School,...

b Thi gian cn li 1:28:14 Form a long butterfly spread using the three call options in the table below: CI C2 C3 Strike $90 Strike- $100 Strike= $110 Expiry=180 days Expiry=180 days Expiry=180 days...

Q give answers Consider a two-period small open economy populated by a large number of identical households with preferences described by the utility function lnCT 1 + lnCN 1 + lnCT 2 + lnCN 2 where...

I just need questions 30-6 and 30-14 placed on excel and everything must be calculated USING EXCEL. Thank you very much. FIN516 WEEK 3 - HOMEWORK Andrew Plaza Problem 20-6 on Call Options Based on...

4ANSWER 1. Determine which statement about zero-cost purchased collars is FALSE (A) A zero-width, zero-cost collar can be created by setting both the put and call strike prices at the forward price....

Kaywinnet Inc. is currently assessing whether it should purchase a new robotic production line. The new robotic line will cost $2,750,000 and last 10 years. The equipment qualifies for a CCA rate of...

In an article entitled, "Corn Prices Surge on Export Demand, Crop Data," The Wall Street Journal identified several exogenous shocks that pushed U.S. corn prices sharply higher. Suppose the U.S....

Sue is Kinil Corporation's majority shareholder. Sue owns enough stock in Kinil that if she were to cell it: the sale would be a transfer of control of the firm. Does Sue owe any duty to Kinil or the...

Resolution Ltd manufactures three products: Product RR, Product SS and Product TT. The contribution per unit of the respective products is as follows: Product RR Product SS Product TT Contribution...