Stock A is currently trading @ 5500. Justin is expecting the markets to rise from these...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Stock A is currently trading @ 5500. Justin is expecting the markets to rise from these levels. So selling 50 Put Option of Stock A having Strike 5500 @ premium 50 each will benefit Justin when Stock A stays above 5450. Justin's profit can be shown below. 4000 2000 0 -2000 5200 5300 5400 5500 5600 5700 -4000 -6000 -8000 -10000 -12000 -14000 Q4. Discuss advantages/disadvantages of this strategy. What is the max that Justin can lose and what is the breakeven stock price? Stock A is currently trading @ 5500. Justin is expecting the markets to rise from these levels. So selling 50 Put Option of Stock A having Strike 5500 @ premium 50 each will benefit Justin when Stock A stays above 5450. Justin's profit can be shown below. 4000 2000 0 -2000 5200 5300 5400 5500 5600 5700 -4000 -6000 -8000 -10000 -12000 -14000 Q4. Discuss advantages/disadvantages of this strategy. What is the max that Justin can lose and what is the breakeven stock price?
Expert Answer:
Answer rating: 100% (QA)
Advantages of this strategy By selling the put option Justin receives a premium of 50 per contract w... View the full answer
Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
Posted Date:
Students also viewed these finance questions
-
The scatterplot shows the gross domestic product (GDP) of the United States in billions of (2013) dollars plotted against years since 1950. A linear model fit to the relationship looks like this:...
-
The Internet Use data file on the text CD contains data on the number of individuals with broadband access and Gross Domestic Product (GDP) for 33 nations. Let x represent GDP (in billions of U.S....
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
1. Give the format of HTTP request message. 2. Give the format of HTTP response message.
-
Find io(t) for t > 0 in the network in figure using the step-by-step method. 12 V 2 kn 200 F 2 kn 2 kn 2 kn 4 kn
-
Five years ago Ken Williams gave up his job as a primary school teacher and founded the Play Smart Toys Company. It was clear to him at the time that there was a gap in the market for toys that...
-
For the given table of observed frequencies: a. Compute the row totals, the column totals, and the grand total. b. Construct the corresponding table of expected frequencies. c. Compute the value of...
-
On July 31, 2012, the balances of the accounts appearing in the ledger of Sagebrush Company are as follows: Instructions 1. Does Sagebrush Company use a periodic or perpetual inventory system?...
-
S = 14.93 (capture at the close) K (strike price) = 17 r = 0.25% Price date = 26 March Maturity Date = 20 May Trading days = 39 T = Trading days / 252 = 39 / 252 = 0.155 Found on the mid of the put...
-
1. How can managers use recommendations derived from need theories to motivate temporary employees? Discuss. 2. To what extent can managers use Herzberg's two-factor theory to motivate temporary...
-
If you are not completely satisfied with a Swarovski purchase or gift for any reason, you have the right to return the product within 14 days from your order's receipt. The friendly return policy...
-
The accounting records of Redman Sporting Goods Inc., a wholesaler of various types of sports equipment, shows the following data regarding the purchases and sales of a particular model of baseball...
-
XYZ is a company based in Pune that offers financial courses to students. It has a system which has trading screens so people can learn using live markets. Its system and financial courses will be...
-
You are retained to represent Andreas with respect to his application for citizenship. Andreas first entered Canada as a visitor on April 4, 2018, to visit his cousin and his family in Port Perry,...
-
Factor each polynomial, if possible. If the polynomial cannot be factored using Integers, write prime. 2 x + 17x + 42 y-17y+72 n -2n-35
-
Essay on the judiciary's role in upholding or undermining the rule of law during the period of 1910-1989. (In South Africa). with reference to some of these cases: Incorporated Law Society v Wookey...
-
You're a rookie officer teamed with a veteran cop known for his aggressive tactics. One day, while patrolling a high-crime area, you pull up to a street corner and both of you notice teenagers slowly...
-
A firm offers two products for sale. The marginal cost of one product is new zero once the first unit has been produced. The marginal cost of the other product rises as output rises. What would be...
-
Explain the potential conflict of interest that arises when doctors own the hospitals in which they work. The following news article mayhelp. The executive who became the most visible symbol of...
-
A wholly owned subsidiary of Ward Inc. has certain expense accounts for the year ended December 31, 2014, stated in local currency units (LCU) as follows: LCU Depreciation of equipment (related...
-
Serven Corporation has estimated its accrual-basis revenue and expenses for June 2014 and would like your help in estimating cash disbursements. Selected data from these estimated amounts are as...
-
Find the free-vibration response of the spring-mass system shown in Fig. 6.6 (a) for \(k_{1}=k, k_{2}=2 k, k_{3}=3 k, m_{1}=m, m_{2}=2 m\), and \(m_{3}=3 m\) corresponding to the initial conditions...
-
Find the free-vibration response of the tightly stretched string shown in Fig. 6.33 for \(m_{1}=2 m, m_{2}=m, m_{3}=3 m\), and \(l_{i}=l(i=1,2,3,4)\). Assume the initial conditions as...
-
Find the free-vibration response of the triple pendulum shown in Fig. 6.10 for \(l_{i}=l(i=1,2,3)\) and \(m_{i}=m(i=1,2,3)\) for the initial conditions \(\theta_{1}(0)=\theta_{2}(0)=0\),...
Study smarter with the SolutionInn App