You think the price of AMZN stock, which is currently $900 is likely to change significantly over
Question:
You think the price of AMZN stock, which is currently $900 is likely to change significantly over the next three months, you are just not sure which direction. So you buy a long straddle position, with a call and put option, worth $8 and $9 per share, respectively, three months to expiration, and a strike price of $900.f at expiration AMZN is trading at $896, what is your net profit per share on this position?
You think the price of AMZN stock, which is currently $900 is likely to change significantly over the next three months, you are just not sure which direction. So you buy a long straddle position, with a call and put option, worth $2 and $6 per share, respectively, three months to expiration, and a strike price of $900.What is the lower breakeven stock price? (There are two breakeven stock prices in this problem, answer the lower one)
Three month European put options with strike prices of $35 and $40 cost $4 and $6, respectively. You bought a bear spread using those two put options. a. What is the maximum gain per share from the bear spread?
You think the price of AMZN stock, which is currently $900 is likely to change significantly over the next three months, you are just not sure which direction. So you buy a long strangle position, with a call and put option, worth $15 and $2 per share, respectively, three months to expiration, and strike prices of 910 (call) and 890 (put). If at expiration AMZN is trading at $866, what is your net profit per share on this position?
- Three call options on a stock have the same expiration date and strike prices of 55,60,65. The market prices are $8, $5, and $3, respectively.
- a. Explain how a butterfly spread can be created.
- b. Construct a table showing the profit per share from the strategy for the following stock prices.
Stock Price on Maturity | Profit |
50 |
|
57 |
|
60 |
|
64 |
|
70 |
|
c. For what range of stock prices would the butterfly spread lead to a profit?
d. Graph the profit diagram to this strategy. Please label the three strike prices on the horizontal axis; label max gain and max loss on the vertical axis.
Three month European put options with strike prices of $35 and $40 cost $4 and $6, respectively. You bought a bear spread using those two put options.
What is the maximum loss per share from the bear spread? (Answer it as a positive number, e.g. if max loss = 6, just answer it as 6 rather than -
Three month European put options with strike prices of $35 and $40 cost $4 and $6, respectively.
You bought a bear spread using those two put options?
What is the breakeven stock price from the bear spread?
Introduction To Derivatives And Risk Management
ISBN: 9781305104969
10th Edition
Authors: Don M. Chance, Robert Brooks