Nutrien Enterprise is the world's leading producer of potash. It produces and sells potash, nitrogen and...

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Nutrien Enterprise is the world's leading producer of potash. It produces and sells potash, nitrogen and phosphate products nitrogen and phosphate products for agricultural, industrial and feed customers worldwide, wants to increase the profitability of its to increase the profitability of its stock portfolio. Mr. KIKA, the financial director of Nutrien, decides to carry out a to do so, he decides to trade in the Toronto stock options market. To this end, he buys 100 call options on Waste Connections Inc. (a waste management company) on September 25, N+1, under the following (a waste management company) on September 25, N+1, under the following conditions: exercise price: $110.00; premium: $3.20; expiration: December 31, N+1. A. Given that one option is for 10 shares of Waste Connections Inc. calculate the premium paid by the company. B. In early December, the company's share price stabilizes at around $120.00. Analyze the two options available to the company at this time. C. Assuming that the company exercises its options, plot the result as a function of the stock price. as a function of the company's stock price. D. Finally, the company decides to exercise its options when the stock price is $118.30. Calculate the company's gain. E. The seller of the options had purchased these shares for $112.45 each. Calculate the profit he makes. Nutrien Enterprise is the world's leading producer of potash. It produces and sells potash, nitrogen and phosphate products nitrogen and phosphate products for agricultural, industrial and feed customers worldwide, wants to increase the profitability of its to increase the profitability of its stock portfolio. Mr. KIKA, the financial director of Nutrien, decides to carry out a to do so, he decides to trade in the Toronto stock options market. To this end, he buys 100 call options on Waste Connections Inc. (a waste management company) on September 25, N+1, under the following (a waste management company) on September 25, N+1, under the following conditions: exercise price: $110.00; premium: $3.20; expiration: December 31, N+1. A. Given that one option is for 10 shares of Waste Connections Inc. calculate the premium paid by the company. B. In early December, the company's share price stabilizes at around $120.00. Analyze the two options available to the company at this time. C. Assuming that the company exercises its options, plot the result as a function of the stock price. as a function of the company's stock price. D. Finally, the company decides to exercise its options when the stock price is $118.30. Calculate the company's gain. E. The seller of the options had purchased these shares for $112.45 each. Calculate the profit he makes.

Answer rating: 100% (QA)

SOLUTION A The premium paid by the company for 100 call options on Waste Connections Inc is calculated as follows Premium Number of options Option pri... View the full answer