call. What position should the trader take to hedge the position? O Do nothing. The trader is already hedged. O Sell 850 shares. O Buy 850 shares. Buy 400 shares. Sell 400 shares.
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- A call option on a stock has a delta of 0.3. A trader has sold 1,000 options. What position such as buy or sell and many shares should the trader take to hedge the position and why?A trader buys a European put on a share for K3. The stock price is K42 and the strike price is K40. State the circumstances under which the trader will make a profit. State the circumstances under which the option will be exercised. Draw a diagram in support of your answers above, showing the variation of the trader’s profit with the stock price at the maturity of the optionIn follow an Ito process with >0, a stock is worth $80 today, if the price of an option that pays the holder $2 exactly the first time the stock price reaches $200, what is the price of an option? Show all calculation.
- A speculator can choose between (i) buying 108 shares of a stock for $50.58 per share, and (ii) buying 1080 European call options on that stock with a strike price of $42 for $3.99 per option. At maturity, what is the stock price that would make the two alternatives equally profitable? a. 1.58 O b. 42.81 O c. 47.57 d. 45.96 e. 14.183. The price of a stock is $50. The price of a 1-year put option on the stock with a strike price of $40 is quoted as $10 and the price of a 1-year European call option on the stock with a strike price of $60 is quoted as $8. Suppose that an investor buys 50 shares, shorts 50 call options and buys 50 put options. Fill the table Please fill the table for 50 shares and 50 calls and 50 puts. 田 Stock price (ST) in the market Profit for buying 50 shares of $25 $30 $40 $50 $55 $60 $65 stock Option value (Pay off) Short 50 calls Premium for 50 calls Profit from shorting 50 call options Option value (Pay off) Buy 50 puts Premium for 50 puts Profit from buying 50 put options TOTAL ProfitThe price of a stock is $64. A trader buys 1 put option contract (each contract is for 100 options) on the stock with a strike price of $60 when the option price is $10. When does the trader make a profit? When the stock price is below $54 O When the stock price is below $60 O When the stock price is below $50 O When the stock price is below $64 ◄ Previous Next ▸
- Suppose that an investor purchases the common stock at the current market price of $58/share and simultaneously sells for $12 a call to buy the shares at the strike price of $50. At the expiration of the call, price of stock is $77. What is the net profit on the position for this investor? (Round your answer the nearest dollar, do not enter with the dollar sign)You are a trader in IBM options for an investment bank. Your position is long 100 of the Jan 200 calls and that option has the following greeks: delta = .35, gamma = 0, vega = $1.68 IBM stock is currently at $195. a) (1) if you wanted to hedge the vega risk of the position, which of the following trades would help to accomplish that goal? i) ii) iii) iv) buy 1680 shares of IBM stock sell any IBM options that totaled $1.68 of vega c. sell 1680 shares of IBM stock sell an IBM option with .35 delta none of the aboveAn investor owns Citibank stock at $75. They want to sell some 3-month out- of-the-money call options against their position. STRIKES 72.50 75 77.50 CALL PRICE 5.60 4.12 2.84 Create a table showing the profit and loss for underlying trading at 70, 72.5, 75, 77.5, 80 and 82.5 for all the positions and the option strategy. Draw an expiry pay-off diagram, using the prices in the table.
- Assume a stock is selling for GH¢48.50 with options available at 40, 50, and 60 strike prices.The 50 call option price is at 2.75.a. What is the intrinsic value of the 50 call?b. Is the 50 call in the money?c. Are the 40 and 60 call options in the money?Refer to the stock options on Microsoft in the Figure 2.10. Suppose you buy a November expiration call option on 100 shares with the excise price of $140. Required: a-1. If the stock price at option expiration is $144, will you exercise your call?a-2. What is the net profit/loss on your position? (Input the amount as a positive value.)a-3. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) b-1. Would you exercise the call if you had bought the November call with the exercise price $135?b-2. What is the net profit/loss on your position? (Input the amount as a positive value.)b-3. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)c-1. What if you had bought the November put with exercise price $140 instead? Would you exercise the put at a stock price of $140?c-2. What is the rate of return on your position? (Negative…The share price of XYZ on April 24 is $124. A trader sells 200 put options on the stock with astrike price of $120 when the option price is $5. The options are exercised when the stock price is $110. What will be the trader’s result? Выберите один ответ: a. 1000$ gain b. 1500 loss c. 1000$ loss d. 1500$ gain e. 2000$ loss