Question: Please explain your answer. 1. Suppose you short one IBM May 100 put contract at $5 and long one IBM May 105 put contract at

Please explain your answer.

1. Suppose you short one IBM May 100 put contract at $5 and long one IBM May 105 put contract at $2. Your maximum profit/loss from your strategy would be Multiple Choice

gain of $200.

loss of $300.

loss of $200

gain of $300.

None of the above.

2. Suppose you purchase one WFM May 100 put contract at $5 and write one WFM May 105 put contract at $2. The maximum potential profit/loss per contract of your strategy will ________, if both options are exercised.

Multiple Choice

gain of $600

loss of $800

gain of $200

loss of $300

None of the above

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!

Please explain your answer. 1. Suppose you short one WFM May 100 put contract at $5 and long one WFM May 105 put contract at $2. Your maximum profit/loss from your strategy would be Multiple Choice...

1. Horstmeyer Section 2- Short Answer: 1. Suppose you purchase one IBM May 100 call contract at $6 and write (sell) one IBM May 110 call contract at $2. Draw the profil diagram associated with this...

Suppose you purchase one IBM May 100 call contract at $5 and write one IBM May 105 call contract at $2. The maximum potential profit of your strategy is ________ if both options are exercised. Why?...

Suppose you purchase one IBM May 100 call contract at $5 and write one IBM May 105 call contract at $2. The maximum potential profit of your strategy is both options are exercised, if $500 $100 $600...

Use the following information for problems 6,7,8 and 9. Suppose you purchase one IBM May 100 call contract at 55 and write one IBM May 105 call contract at $2. 6. What is the maximum potential profit...

1. Suppose you purchase one WFM May 100 call contract at $7 and write one WFM May 105 call contract at $4. (One option contract = 100 options) If, at expiration, the price of a share of WFM stock is...

Suppose you purchase one TE May 100 call contract at $5 and write one IBM May 105 call contract at $2. If, at expiration, the price of a share of IBM stock is $104, your profit would be $100. $300....

Suppose you purchase one LOL May 100 call contract at $5 and write (i.e., short) one LOL May 105 call contract at $2. At expiration, if LOL is preparing for bankruptcy (and the stock price is near...

please ignore the marked answer Suppose you purchase one WFM May 100 call contract at $5 and write one WFM May 105 call contract at $2. The maximum potential profit of your strategy is if both...

Suppose price for IBM May 100 put is $3 and for IBM May 105 put is $5. a)How to create a bear spread? Buy 1 contract put options with K2=105 and Sell 1 contract put option with K1=100 b)Fill in the...

Shown are all the scores from the second round of the NCAA Mens Basketball Championships 2012. Rank all of the individual scores, and use this set of data to find the percentile corresponding to each...

Suppose you are a typical person in the U.S. economy. You pay 4 percent of your income in a state income tax and 15.3 percent of your labor earnings in federal payroll taxes (employer and employee...

For Pricing, a business must define the Unit so that it always relates to Variable Cost True False

S Help I System Announcements ES Fill in the missing amounts. Sandhill Company Carla Vista Company Sales revenue Sales returns and allowances Net sales Cost of goods sold Gross profit Operating...