Question: Tom sold a put option to Kyle. The contract term on the option is as below. Underlying asset: AAPL Exercise price = $160 Current price

Tom sold a put option to Kyle. The contract term on the option is as below. Underlying asset: AAPL Exercise price = $160 Current price of AAPL = $161 Expiration date: June 1, 2022 Put premium = $1.5 Which of the following statements are correct? Intrinsic value of the option is greater than the put premium currently. Currently the option is in the money. Kyle will break even if the AAPL stock price goes down to $158.5 and exercise the option. Kyle will break even if the AAPL stock price goes up to $161.5 and exercise the option

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!

Fantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique?s demand curve, marginal revenue curve (MR), marginal cost curve...

Tom sold a put option to Kyle. The contract term on the option is as below. Underlying asset: AAPL Exercise price = $ 1 2 0 Current price of AAPL = $ 1 2 1 Expiration date: March 1 , 2 0 2 1 Put...

Please answer this 6 long questions below with the correct answer. If I could have this by tomorrow I would like to tip for a job well done, thanks. 1.Suppose that a two-factor model, where the...

Option F&M Corporation has 1 million shares outstanding, currently selling at S90 each share. The risk-free interest rate is 10% per year. The standard deviation (o) of F&M's stock returns is 26% a...

The last exam will cover these 3 tests plus a few small quizzes. The attached should give you a good idea of the material. Let me know if you have any questions. You can see which I got correct with...

MCQs for Derivatives management 62. The practice of adjusting regularly the futures price to reflect current market conditions is known as marked to markets 63. bitial man gt............... is the...

Which of the following are TRUE about currency put options? Select 3 * 5 points D D IZICICI Put options grants the right to sell the currency at a specified price and time. The higher the variability...

Download Toro's annual report from the activities folder and try questions 1-2. What is the balance-sheet based accrual ratio of Toro for the year of 2011? Note that total debts should include debts,...

If the elasticity of demand for spring break packages to Cancun is -5 and if you notice that this year in Cancun the quantity of packages demanded increased by 10% then what happened to the price of...

The table shown below lists dentist-patient appointment data. A patient is given an appointment at a specific time and date with a dentist. On each day of patient appointments, a dentist will perform...

When creating a market - potential indicator for an emerging market, the variable reflects the fact that although overall size of the market is important, so too is its rate of growth. A . market...

A company issues 1,050 shares of its common stock for $33,600 cash. Prepare journal entries to record this event under each of the following separate situations.