Questions from General Investment

Q: Consider the following options portfolio. You write a February 8 expiration

Consider the following options portfolio. You write a February 8 expiration call option on Microsoft with exercise price $100. You write a February 8 put option with exercise price $95. a. Graph the p...

Q: You write a put option with X = 100 and buy a

You write a put option with X = 100 and buy a put with X = 110. The puts are on the same stock and have the same expiration date. a. Draw the payoff graph for this strategy. b. Draw the profit graph f...

Q: You write a call option with X = 50 and buy a

You write a call option with X = 50 and buy a call with X = 60. The options are on the same stock and have the same expiration date. One of the calls sells for $3; the other sells for $9. a. Draw the...

Q: Devise a portfolio using only call options and shares of stock with

Devise a portfolio using only call options and shares of stock with the following value (payoff) at the option expiration date. If the stock price is currently $55, what kind of bet is the investor ma...

Q: You think there is great upward potential in the stock market and

You think there is great upward potential in the stock market and would like to participate in the upward move if it materializes. However, you are not able to afford substantial stock market losses a...

Q: What are the trade-offs facing an investor who is considering

What are the trade-offs facing an investor who is considering writing a call option on an existing portfolio?

Q: Hatfield Industries is a large manufacturing conglomerate based in the United States

Hatfield Industries is a large manufacturing conglomerate based in the United States with annual sales in excess of $300 million. Hatfield is currently under investigation by the Securities and Exchan...

Q: Why do you think the most actively traded options tend to be

Why do you think the most actively traded options tend to be the ones that are near the money?

Q: The common stock of the C.A.L.L

The common stock of the C.A.L.L. Corporation has been trading in a narrow range around $50 per share for months, and you believe it is going to stay in that range for the next three months. The price...

Q: You are a portfolio manager who uses options positions to customize the

You are a portfolio manager who uses options positions to customize the risk profile of your clients. In each case, what strategy is best given your client’s objective? a. ∙ Performance to date: Up 16...