Question 5

Suppose that a September put option with a strike price of $95 costs $10.0. Under what circumstances will the seller (or writer) of the option earn a profit? Let S equal the price of the underlying.

S > 85.0

S < 105.0

S < 95

S > 95

Question 6

Suppose you enter into a short position to sell March Gold for $255 per ounce. The contract size is 100 ounces, the initial margin is $2550 and the maintenance margin is $1020. At what price will you receive a margin call?

254.93

270.3

255.07

239.7

Question 7

Suppose that on October 24 you buy 12 March gold futures contracts for $250 per ounce. At 11:00 am on October 25 you buy 10 more contracts for $245.5 ounce. At the close of trading on October 25, gold futures settle for $239.0 ounce. If the contract size is 100 ounces and the initial margin equals 2500, how much do you gain or lose as of the close?

-6700.0

-19700.0

19700.0

6700.0

Question 8

Suppose that on October 24 you Sell 8 March gold futures contracts for $345 per ounce. At 11:00 am on October 25 you buy 5 March contracts for $347.0 ounce. At the close of trading on October 25, gold futures settle for $348.0 ounce. If the contract size is 100 ounces and the initial margin equals 3450, how much do you gain or lose as of the close?

-1900.0

1900.0

100.0

-100.0