Melanie purchased a CALL option with a strike price of $80 for a premium of $4.12. At the time of option expiration, the stock market price was $78. At expiration, what was the intrinsic value of the option? What was Melanie's profit (loss) on the play? -$2.12; $6.12 O-$2.12: $4.12 $2.12: $2.00 O$200,-$6.12 O-$2.00: $4.12

Melanie purchased a CALL option with a strike price of $80 for a premium of $4.12. At the time of option expiration, the stock market price was $78. At expiration, what was the intrinsic value of the option? What was Melanie's profit (loss) on the play? -$2.12; $6.12 O-$2.12: $4.12 $2.12: $2.00 O$200,-$6.12 O-$2.00: $4.12

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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Similar questions

Investor B sold a put option and bought a call option when the stock price is $30. The strike price for both options is $35. Premiums on call and put is $3.55 and $4.05 respectively. At the time of maturity, the stock is trading at $48. How much B earned as profit? a) $5.40 b) $17.50 c) $18.50 d) $13.50
Explain this step by step: Gerald purchased 3 put option contracts at an option premium of $0.95 and a strike price of $40. At expiration, the stock price was $42.25 per share. What is his percentage return? What is the percentage return if the stock price at expiration is $39.05? What is the percentage return if the stock price at expiration is $36.18?
A speculator purchased a call option with an exercise price of $35 for a premium of $4. The option was exercised a few days later when the stock price was $34. What was the return to the speculator? www
You are the buyer of a call option which expires today. The call premium is $0.75 and the exercise price is $ 13.50. The underlying stock price is 12.50. What is your profit or loss? Group of answer choices Gain $0.75 Gain $1 Loss $0.75 Loss $0.25 None of the above.
You purchased a call option on TSLA with an exercise price of $180 for a premium of $5.0 and held it until the expiration date. What is your profit (per share) if the stock sells for $192 on the expiration date? Enter your answer without the dollar sign. Your Answer: Answer
An investor sells a European Put on a share for $4. The stock price is $47 and the strike price is $50. Under what circumstances does the investor make a profit? Under what circumstances will the option be exercised? Draw a diagram showing the variation of the investor's profit with the stock price at the maturity of the option.
You have purchased a put option on Pfizer common stock. The option has an exercise price of $45 and Pfizer's stock currently trades at $47. The option premium is $0.60 per contract. a. What is your net profit on the option if Pfizer's stock price does not change over the life of the option? b. What is your net profit on the option if Pfizer's stock price falls to $41 and you exercise the option? (For all requirements, negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16)) a Net profit b. Net profit per share per share
MetaAn investor buys a put option contract for S of IBM Inc. stock, with a contract size of ton shares. The stock price is currently $35, and the exercise price is $10. What are the investor's expectations, and under what conditions does the investor make a profit? (1) Is this put option in-the-money? ii) Under what circumstances will the option be exercised? (iv) If at the expiration of the option, the stock price is $ so calculate the profit/loss of the investment and explain what the transactions are? Shall the investor exercise this option?
Q1. You have purchased a call option on Johnson & Johnson common stock. The option has an exercise price of $57.50 and J & J’s stock currently trades at $58.93. The option premium is $2.17 per contract. Calculate your net profit on the option if J & J’s stock price rises to $62.50 and your exercise the option. Calculate your net profit on the option if J & J’s stock price falls to $58.00 and your exercise the option. If J & J’s stock price falls to $58.00 show that it is more profitable to exercise than not exercise the option you have purchased.
Assume that Sara gets into a short European put option to sell one share of stock Y for $66 that costs $7 and is held until maturity. Under what circumstances will Sara, the seller of the option (the party with the short position), make a profit? Under what circumstances will the option be exercised (from long position perspective)? Draw a diagram illustrating how the profit from a short position in the option depends on the stock price at maturity of the option.
An investor buys a put option with an exercise price of $40 when the stock price is $42. The option premium is $1. At expiration the stock price is $37. The investor will realize____________. A. a loss of $2. B. a loss of $3. C. a profit of $1. D. a profit of $2.
You purchased two $35 call contracts at $3.40 per option. You exercised the option on expiration day when the stock was $43. What was your profit and rate of return on investment?

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