Consider the following option combination: Long $9 Straddle +1 SK2C90060c +1 SK2P90060c What is the net payoff value of the option combination above (in $/bu. + or -) if the price of Soybeans (SK2) falls to $7.50/bushel.
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- Consider the following option combination: Long $8.50 $9.50 Strangle +1 SK2C95040C +1 SK2P85040c What is the net payoff value of the option combination above (in $/bushel) if the price of Soybeans falls to $8.00/bushel?2. [Straddle]Suppose AAPL current price is $200. You purchase 10 calls with strike price equal to $200. You also bought 10 puts with strike price equals to $200. (This is called an option straddle) The put price is listed at $1.5 and the call is listed at $1.6. 1. What is the cost to set up the straddle? 2. What is your profit/loss if AAPL price goes to $210? $188? Stay at $200? 3. What do you think about the straddle strategy? When you lose money on this straddle strategy?You have the following data on call prices covering the same asset with the same expiration date. Strike Price. Call Option Price $40 -----------$10.50 $45-------------$6.50 $50-------------$3.00 a)Suppose an investor purchases one option with X = $40 and one with X = $50, but sells two options with X = $45. Assuming no transaction costs, in what range of asset prices does the investor make a positive net profit? b)Based on the above strategy, what is the investor’s maximum potential dollar profit and maximum potential dollar loss
- Use the Black-Scholes model to value a call option with the following data: Price $34 Exercise price 30 Risk-free rate 0.04 time to expiry 0.5 0.31557 0.099584 0.762113 0.538972 0.777004 0.705047 Post your answer with 2 decimal places 5 0² d1= d2= Nd1= Nd2=sell 1 abc straddle (x = $55) @$6,50 buy 1 abc strangle (x= $50 , x= $60 ) @ $2,00 . options have the same expiration dates. what is the cost of initiating this stratergy ?Assume that the two-period Binomial Option Pricing model holds (n=2), with the following information (t = 1 year, S = $40, u = 1.1, d =0.9, K= $45, and r = 10%). What is the value of this * ?European call option %3D %3D
- Suppose you write the following put option (1 option, not 1 contract containing 100 options). What is the payoff and profit at expiration if the stock price is $75? Put Strike Symbol 80 ABC210621C00040000 Last 3.32 a. payoff is -5.00; profit is 1.68 X b. payoff is -5.00; profit is 3.32 c. payoff is 0; profit is 0 d. payoff is -5.00; profit is -1.68 e. payoff is 0; profit is -3.32 Chg 1.47A call option with a strike price of $50 costs $2. A put option with a strike price of $45 costs $3. Explain how a strangle can be created from these two options. What is the pattern of profits?Using put-call parity, if the price of an At-the-Money Call option maturing in 1 day is $3.14, what is the price of an of an At-the-Money Put option maturing in 1 day (give an approximation)? A. $0.95 B. $2.86 C. $3.14 D.$3.26
- We will derive a two-state put option value in this problem. Data: S0 = $180; X = $190; 1 + r = 1.10. The two possibilities for ST are $210 and $110.a. The range of S is $100 while that of P is $80 across the two states. What is the hedge ratio of the put? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) (The answer for this one is -.80) :)b. Form a portfolio of four shares of stock and five puts. What is the (nonrandom) payoff to this portfolio? (Round your answer to 2 decimal places.) c. What is the present value of the portfolio? (Round your answer to 2 decimal places.) d. Given that the stock currently is selling at $180, calculate the put value. (Do not round intermediate calculations and round your answer to 2 decimal places.)The following graph shows the contingency graph for purchasers of euro put options, with a premium of $0.06 and an exercise price of $1.38. NET PROFIT PER UNIT (Dollars per unit) 0.07 0.06 0.05 0.04 0.03 0.02 0.01 0 -0.01 -0.02 -0.03 -0.04 -0.05 -0.06 OD ← 1.3, 0 -0.07 + 1.22 1.24 1.26 1.28 1.30 1.32 1.34 1.36 1.38 1.40 FUTURE SPOT RATE (Dollars per euro) ? According to the graph, if the spot rate turns out to be $1.26, and the option is exercised, the buyer will According to the graph, break-even price is $0.04 $0.06 $0.01 $0.03 per unit.Let S = $50, r = 4% (continuously compounded), d = 1%, s = 40%, T = 1.5. In this situation, the appropriate values of u and d are 1.44616 and 0.72332, respectively. Using a 2-step binomial tree, calculate the value of a $55-strike European put option. a. $9.203 b. $11.323 c. $11.205 d. $10.874 e. $10.552
