Strategy: Payoff: Cost: Profit: If you feel that Stock price can go up to $3,200 or...

 

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Strategy: Payoff: Cost: Profit: If you feel that Stock price can go up to $3,200 or can go down to $1,500, but you aren't sure about the direction, what strategy would be more appropriate when you choose options with strike price of 2,200. Explain. Calculate the payoff and profit of the strategy. b. At what stock price(s) your profit would be zero in the above case. c. If stock price can go up to $3,200 or can go down to $1,500 and you expect stock price is more likely to go down to $1,500, what strategy would better serve you with a strike price of $2,200? Explain. Calculate payoff and profit of the strategy. Strategy Payoff Cost Profit d. Calculate the range of stock prices beyond which your profit would be positive if you follow the strategy in (c)? Type Call Call Call Call Call Call Call Call Call Call Call Call Call Call Call Put Put Put Put Put Put Put Put Put Put Put Put Put Put Put Contract Name GOOG210618CO1800000 GOOG210618C01820000 GOOG210618C01840000 GOOG210618C01860000 GOOG210618C01880000 GOOG210618C01900000 GOOG210618C01920000 GOOG210618C01940000 GOOG210618C01960000 GOOG210618C01980000 GOOG210618C02000000 GOOG210618C02100000 GOOG210618C02200000 GOOG210618C02300000 GOOG210618C02800000 GOOG210618P01800000 GOOG210618P01820000 GOOG210618P01840000 GOOG210618P01860000 GOOG210618P01880000 GOOG210618P01900000 GOOG210618P01920000 GOOG210618P01940000 GOOG210618P01960000 GOOG210618P01980000 GOOG210618P02000000 GOOG210618P02100000 GOOG210618P02200000 GOOG210618P02300000 GOOG210618P02800000 Last Trade Date 2021-02-08 3:11PM EST 2021-02-03 11:11AM EST 2021-02-08 3:11PM EST 2021-02-03 2:13PM EST 2021-02-04 11:04AM EST 2021-02-05 3:33PM EST 2021-02-03 3:43PM EST 2021-02-03 9:40AM EST 2021-02-05 1:51PM EST 2021-02-04 10:37AM EST 2021-02-05 3:00PM EST 2021-02-08 3:48PM EST 2021-02-08 3:26PM EST 2021-02-08 11:44AM EST 2021-02-04 12:05PM EST 2021-02-08 11:27AM EST 2021-02-05 12:29PM EST 2021-02-03 10:15AM EST 2021-02-08 10:32AM EST 2021-02-08 10:52AM EST 2021-02-08 12:11PM EST 2021-02-08 11:57AM EST 2021-02-08 12:00PM EST 2021-02-08 10:28AM EST 2021-02-08 3:45PM EST 2021-02-08 1:24PM EST 2021-02-08 10:19AM EST 2021-02-05 10:12AM EST 2021-02-05 3:25PM EST 2021-02-01 9:35AM EST Last Price Bid 1800 337.72 1820 324 1840 306.77 339.5 323.5 309.6 294.3 287.8 1860 1880 285.7 279.6 266.1 1900 292.12 1920 261.16 251.8 1940 218 237 1960 231 224 1980 221.18 2000 202.25 2100 2200 2300 2800 1800 1820 1840 1860 1880 1900 1920 1940 1960 Strike 50 52.7 57.4 62.8 68.2 75.2 83.2 89.2 93.9 102.8 110 2100 153.25 2200 1980 2000 146 106.6 70 12.25 2300 2800 200 280.8 935 211.5 200 145.5 102.5 73.1 12.5 48 51.6 56.1 60.5 66.7 71.6 77.5 84 90.4 96.1 105.8 151.9 208.1 274.8 712.2 Ask Change % Change 348.4 -4.28 -1.25% 332.1 316 300 286.8 0 101.61 -26.1 28.6 24.02 273.2 258.4 245.2 234 219.5 209 154.2 108.7 79.2 13.9 49.8 57.3 61.2 63.6 69 75 80.9 87.4 94.7 102.5 110.1 156.4 213.9 281.8 722 0 0 0 27.83 0 -4.1 -3.4 -4.74 0 -4.2 -2.2 -7.6 0.1 -14.4 1.4 3.2 -73.3 0.7 1 1.1 -2.55 -26.25 0 0 49.53% -8.31% 11.12% 8.96% - 14.39% -2.73% -3.09% -6.34% -7.75% -4.01% -11.69% 0.16% -17.43% 1.90% 4.00% -45.11% 0.75% 0.98% 1.01% -1.64% -11.60% Volume 3 2 3 1 2 1 2 2 2 1 5 18 11 19 2 7 1 3 1 4 1 1 3 1 2 51 7 1 4 Open Interest 618 100 53 231 120 307 442 41 133 87 520 764 766 257 55 338 75 19 28 22 319 17 6 49 28 45 23 4 9 1 Strategy: Payoff: Cost: Profit: If you feel that Stock price can go up to $3,200 or can go down to $1,500, but you aren't sure about the direction, what strategy would be more appropriate when you choose options with strike price of 2,200. Explain. Calculate the payoff and profit of the strategy. b. At what stock price(s) your profit would be zero in the above case. c. If stock price can go up to $3,200 or can go down to $1,500 and you expect stock price is more likely to go down to $1,500, what strategy would better serve you with a strike price of $2,200? Explain. Calculate payoff and profit of the strategy. Strategy Payoff Cost Profit d. Calculate the range of stock prices beyond which your profit would be positive if you follow the strategy in (c)? Type Call Call Call Call Call Call Call Call Call Call Call Call Call Call Call Put Put Put Put Put Put Put Put Put Put Put Put Put Put Put Contract Name GOOG210618CO1800000 GOOG210618C01820000 GOOG210618C01840000 GOOG210618C01860000 GOOG210618C01880000 GOOG210618C01900000 GOOG210618C01920000 GOOG210618C01940000 GOOG210618C01960000 GOOG210618C01980000 GOOG210618C02000000 GOOG210618C02100000 GOOG210618C02200000 GOOG210618C02300000 GOOG210618C02800000 GOOG210618P01800000 GOOG210618P01820000 GOOG210618P01840000 GOOG210618P01860000 GOOG210618P01880000 GOOG210618P01900000 GOOG210618P01920000 GOOG210618P01940000 GOOG210618P01960000 GOOG210618P01980000 GOOG210618P02000000 GOOG210618P02100000 GOOG210618P02200000 GOOG210618P02300000 GOOG210618P02800000 Last Trade Date 2021-02-08 3:11PM EST 2021-02-03 11:11AM EST 2021-02-08 3:11PM EST 2021-02-03 2:13PM EST 2021-02-04 11:04AM EST 2021-02-05 3:33PM EST 2021-02-03 3:43PM EST 2021-02-03 9:40AM EST 2021-02-05 1:51PM EST 2021-02-04 10:37AM EST 2021-02-05 3:00PM EST 2021-02-08 3:48PM EST 2021-02-08 3:26PM EST 2021-02-08 11:44AM EST 2021-02-04 12:05PM EST 2021-02-08 11:27AM EST 2021-02-05 12:29PM EST 2021-02-03 10:15AM EST 2021-02-08 10:32AM EST 2021-02-08 10:52AM EST 2021-02-08 12:11PM EST 2021-02-08 11:57AM EST 2021-02-08 12:00PM EST 2021-02-08 10:28AM EST 2021-02-08 3:45PM EST 2021-02-08 1:24PM EST 2021-02-08 10:19AM EST 2021-02-05 10:12AM EST 2021-02-05 3:25PM EST 2021-02-01 9:35AM EST Last Price Bid 1800 337.72 1820 324 1840 306.77 339.5 323.5 309.6 294.3 287.8 1860 1880 285.7 279.6 266.1 1900 292.12 1920 261.16 251.8 1940 218 237 1960 231 224 1980 221.18 2000 202.25 2100 2200 2300 2800 1800 1820 1840 1860 1880 1900 1920 1940 1960 Strike 50 52.7 57.4 62.8 68.2 75.2 83.2 89.2 93.9 102.8 110 2100 153.25 2200 1980 2000 146 106.6 70 12.25 2300 2800 200 280.8 935 211.5 200 145.5 102.5 73.1 12.5 48 51.6 56.1 60.5 66.7 71.6 77.5 84 90.4 96.1 105.8 151.9 208.1 274.8 712.2 Ask Change % Change 348.4 -4.28 -1.25% 332.1 316 300 286.8 0 101.61 -26.1 28.6 24.02 273.2 258.4 245.2 234 219.5 209 154.2 108.7 79.2 13.9 49.8 57.3 61.2 63.6 69 75 80.9 87.4 94.7 102.5 110.1 156.4 213.9 281.8 722 0 0 0 27.83 0 -4.1 -3.4 -4.74 0 -4.2 -2.2 -7.6 0.1 -14.4 1.4 3.2 -73.3 0.7 1 1.1 -2.55 -26.25 0 0 49.53% -8.31% 11.12% 8.96% - 14.39% -2.73% -3.09% -6.34% -7.75% -4.01% -11.69% 0.16% -17.43% 1.90% 4.00% -45.11% 0.75% 0.98% 1.01% -1.64% -11.60% Volume 3 2 3 1 2 1 2 2 2 1 5 18 11 19 2 7 1 3 1 4 1 1 3 1 2 51 7 1 4 Open Interest 618 100 53 231 120 307 442 41 133 87 520 764 766 257 55 338 75 19 28 22 319 17 6 49 28 45 23 4 9 1

Answer rating: 100% (QA)

a If you are unsure about the direction of the stock price movement but feel it can go up to 3200 or ... View the full answer