a. Long put option with a strike price of €30 and short put option with a strike price of €50 O b.Long call option with a strike price of €30 and short call option with a strike price of €50 c. Short put option with a strike price of €30 and long put option with a strike price of €50 O d. Short call option with a strike price of €30 and long call option with a strike price of €50
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- A call option has a strike price of MYR3.00/SGD. If the option is exercised before maturity, what price in the followings would maximize gain? a. MYR3.00/SGD. b. MYR2.90/SGD. c. MYR3.05/SGD. d. MYR2.95/SGD.A put option has a strike price of MYR3.00/SGD. If the option is exercised before maturity, what price in the followings would maximize gain? a. MYR3.00/SGD. b. MYR2.90/SGD. c. MYR3.05/SGD. d. MYR2.95/SGD.Q2: Given the following inputs for YMMV: Interest rate 3.25 Dividend rate 3.00 Spot Price Volatility (%) 30.21 12.00 Strike Price 30.00 Expiry (months) T Option type 12 European Put a) Compute u, d, Pup; Pdn, Construct a 3 step tree and price the option.
- Consider a portfolio that consists of the following four derivatives: 1) a put option written(sold) with strike price K − 5, 2) a call option purchased with strike price K − 5, 3) a call option written(sold) with strike price K + 5, and 4) a put option purchased at strike price K + 5. All options are European.The risk-free rate is rf , the time to expiration is T, the initial stock price is S0, and the stock price atmaturity is ST . What are the payoffs at expiration of this portfolio? What must the price of this portfoliobe?a. Constructa portfolio of European put oplions with the payoff at maturity as in the picture. The portfolio can include both long (buy) and short (sell) positions. Describe how (specify clearly who exercise and how many they buy or sell at each price level and number of options, strike price, etc.) 2/3 70 60 50 40 30 20 10 20 40 60 80 100 Price at maturitydate b. An investor, with the expectation of an increase in P for stock A, can buy a option with strike price £50 or sell a put option with strike price £50. These actions have the same outcome for the investor with an expectation of price increase. True or False. Explain. callH2. Using the Black-Scholes model (BSOPM), compute the standard deviation that is implied by the following call option data as: the time to the option's maturity is 0.25 years, the price of the underlying option asset is RM30, the continuously compounded risk-free interest rate is 0.12. the exercise or striking price is RM30, and the cost or premium of the call is RM1.90.
- Price of Call option is 2.27 Price of Put option is 20.45 Is there an arbitrage opportunity in this market? Explain in detailUsing put-call parity, if the price of an At-the-Money Call option maturing in 1 day is $3.14, what is the price of an of an At-the-Money Put option maturing in 1 day (give an approximation)? A. $0.95 B. $2.86 C. $3.14 D.$3.26A. An option is trading at $5.03. If it has a delta of -.56, what would the price of the option be if the underlying increases by $.75? What would the price of the option be if the underlying decreases by $.55? B. What type of option is this and how? C. With a delta of -.56, is this option ITM, ATM or OTM and how?
- Consider the following portfolio: Long 0 puts with strike price 98.0 Short 1 puts with strike price 98.0 Long 0 calls with strike price 100.5 Short 1 calls with strike price 100.5 Complete the following payoff table. What choice corresponds to the last row of the table? Position ST ≤ 98.0 98.0 < ST ≤ 100.5 ST > 100.5 portfolioQuestion A trader buys (long) a call option with a strike price of $120 and sells (short) a put option with a strike price of $100. Both options have the same maturity. The call costs $20 and the price of put is $10. What is the portfolio payoff at expiry if the security price at expiry is $70? Draw a diagram showing the variation of the trader's profit with the security price at expiry.Consider the following portfolio: Long 0 calls with strike price 77.0 Short 1 calls with strike price 77.0 Long 1 calls with strike price 102.0 Short 0 calls with strike price 102.0 Complete the following payoff table. What choice corresponds to the last row of the table? Position ST ≤ 77.0 77.0 < ST ≤ 102.0 ST > 102.0 portfolio