You own a put option on Ford stock with a strike price of $11. When you bought the put, its cost to you was $7. The option will expire in exactly six months' time. a. If the stock is trading at $4 in six months, what will be the payoff of the put? What will be the profit of the put? b. If the stock is trading at $24 in six months, what will be the payoff of the put? What will be the profit of the put? c. Draw a payoff diagram showing the value of the put at expiration as a function of the stock price at expiration. d. Redo c, but instead of showing payoffs, show profits.

You own a put option on Ford stock with a strike price of $11. When you bought the put, its cost to you was $7. The option will expire in exactly six months' time. a. If the stock is trading at $4 in six months, what will be the payoff of the put? What will be the profit of the put? b. If the stock is trading at $24 in six months, what will be the payoff of the put? What will be the profit of the put? c. Draw a payoff diagram showing the value of the put at expiration as a function of the stock price at expiration. d. Redo c, but instead of showing payoffs, show profits.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You own a call option on Intuit stock with a strike price of $34. When you purchased the option, it cost $6. The option will expire in exactly three months' time. a. If the shares are trading at $43 in three months, what will be the payoff of the call? What will be the profit of the call? b. If the shares are trading at $31 in three months, what will be the payoff of the call? What will be the profit of the call? c. Draw a payoff diagram showing the value of the call at expiration as a function of the share price at expiration. d. Redo (c), but instead of showing payoffs, show profits. a. The payoff of the call is $ (Round to the nearest dollar.) and the profit of the call is $
You shorted a call option on Intuit stock with a strike price of $38. When you sold (wrote) the option, you received $3. The option will expire in exactly three months' time. a. If the stock is trading at $49 in three months, what will your payoff be? What will your profit be? b. If the stock is trading at $35 in three months, what will your payoff be? What will your profit be? c. Draw a payoff diagram showing the payoff at expiration as a function of the stock price at expiration. d. Redo c, but instead of showing payoffs, show profits. Question content area bottom Part 1 a. The payoff of the short is $ short is $ enter your response here. enter your response here, and the profit of the. Please step by step answer.
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Assume that you have shorted a call option on Intuit stock with a strike price of $40. The option will expire in exactly three months' time. a. If the stock is trading at $55 in three months, what will you owe? b. If the stock is trading at $35 in three months, what will you owe? c. Draw a payoff diagram showing the amount you owe at expiration as a function of the stock price at expiration. a. If the stock is trading at $55 in three months, what will you owe? If the stock is trading at $55 in three months, you will owe $ (Round to the nearest dollar.)
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You own a call option on Intuit stock with a strike price of $40. The option will expire in exactly three months time. If the stock is trading at $55 in three months, what will be the payoff of the call? Note: practice drawing the payoff diagram.
Consider the following: your purchased a put option on JPM two months ago, with a strike price for the option of $138, and the option expires today. Suppose the stock price is $152. What is the exercise value?
Suppose that currently, stock BVC is trading at $100 per share. A put option with a strike price of $120 that expires in one year is selling at $11.12. What is the profit to a trader who buys this put option, assuming that in one year the stock price of BVC is $125

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