Risk Management Applications of Option Strategies
About the Lecture
The lecture Risk Management Applications of Option Strategies by Edu Pristine is from the course Archiv - Derivatives. It contains the following chapters:
- Payoff for Long Call Option
- Call Option Profit and Losses
- Put Option Profit and Losses
- Covered Call Strategy
- Protective Put Strategy
Author of lecture Risk Management Applications of Option Strategies
Edu Pristine
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Excerpts from the accompanying material
... expiration, and payoff graph of the strategies of buying and selling calls and puts and determine the potential outcomes for investors using these ...
... Consider a call option: Premium = $5 Strike price = $50 ...
... price = $50 Profit = Max(0,X-S T) p 0 Max Profit = ð X-p0 ...
... be trading for $42 at expiration, then the option: 1.Expires worthless ...
... profit or loss per share if a call option is purchased for ...
... underlying was traded at $22. Premium at expiry day ...
... for an investor who sold a call on the firm's stock for ...
... price of $75 for a premium of $6 ...
... purchases 1000 shares of a company for $100 at the same time writes a 6 months European call option for a ...
... 1 month put option is $0.92. Both have a strike price of $80. What is the maximu m profit/ loss to the ...
... 90 day LIBOR with $1 million face value with the strike rate of 5% .If at the expiration the LIBOR is ...
... price of $55 for a $5 premium...
... the following is the riskiest single-option ...
... Write unprotected Call 2.Buy strike price of $104 per share ...
... He would also need to repay his loan with the interest payment of $3000. Hence his net gain is of $ 1000. The correct answer is $200 profit. Since the call option price is higher than the put option price, the price of the stock is more likely to increase. In such a scenario the call option would be executed. The writer of the call gets $80 per share resulting in a profit of $200. The correct answer is exercise the option and receive $2,500 150 days from now. The investor will receive $1,000,000 x (0.06-0.05) x (9 0/360) = $2,500 at 90 days after expiration which is 150 days ...
... This assumes the price of the stock falls to zero & you get to sell for $55 Profit would be = $55-$5 = $5012. When writing an uncovered call, the stock could go up infinit ...
... promote, or warrant the accuracy or quality of the products or services offered by Pristine. CFA Institute, CFA ® and Chartered Financial Analyst ® are trademarks owned by CFA Institute. The LOS are the sole property of the CFA Institute. ...
... Involves selling call options of stocks already owned or simultaneously bought. Motivation: Earning a return from the underlying that is already owned. Lowering the cost of acquisition of the underlying asset. Expectation: Moderate rise in the ...
... Involves buying put options of stocks already owned or simultaneously bought. Motivation: Protection against loss in the value of stocks owned. Expectation: Rise in the price of the underlying Advantage Trader profits ...
... of stock plus the exercise price 3. The exercise price...
... put option of the same company with a strike price of $48 for a price of $4 per share. If the spot price of the stock on the expiration date is $52. What is the maximum profit/loss to a gain is $8. Investor can suffer a loss of $45 ...
... The premium charged for writing the call is $ 4. Then which of the following statements does not reflect the gain/loss of the investor. 1. Investor can a loss of $ 48. ...
... 1. The correct answer is the exercise price. ...
... 2. The correct answer is $200 profit. The put option would not be executed and the writer of the put gets the premium of $ 400. But since it is anaked call option, the investor has to buy the shares in the spot market at $52 and close his short position. In this transaction he makes a profit of $200 (5000 +400-5200)...
... 3. The correct answer is Investor can a loss of $48. The breakeven value of the assets price for the investor is $46. The option will be exercised, when the asset value moves above $55. So the investor can make any gain up to $9. ...
