5a. You buy a call option on ROCK stock with an exercise price of $103. Today, the stock’s price is $95. The premium on
Posted: Tue Nov 23, 2021 8:53 am
5a. You buy a call
option on ROCK stock with an exercise price of $103. Today, the
stock’s price is $95. The premium on the call option is $3. Just
before expiration, the stock’s price is $100. Will you exercise the
option? What is your net profit or loss? What is the break-even
price? (show your work) (2.5 points)
5b. You sell a put
option on ROLL stock with an exercise price of $97. Today, the
stock’s price is $95. The premium on the put option is $2. Just
before expiration, the stock’s price is $98. Will the option be
exercised? What is your net profit or loss? What is the break-even
price? (show your work) (2.5 points)
5c. What is the
maximum potential gain from selling a call option? Explain.
(1.5 points)
option on ROCK stock with an exercise price of $103. Today, the
stock’s price is $95. The premium on the call option is $3. Just
before expiration, the stock’s price is $100. Will you exercise the
option? What is your net profit or loss? What is the break-even
price? (show your work) (2.5 points)
5b. You sell a put
option on ROLL stock with an exercise price of $97. Today, the
stock’s price is $95. The premium on the put option is $2. Just
before expiration, the stock’s price is $98. Will the option be
exercised? What is your net profit or loss? What is the break-even
price? (show your work) (2.5 points)
5c. What is the
maximum potential gain from selling a call option? Explain.
(1.5 points)