Questions from General Investment

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: what ways is owning a corporate bond similar to writing a put

what ways is owning a corporate bond similar to writing a put option? A call option?

Q: An executive compensation scheme might provide a manager a bonus of $

An executive compensation scheme might provide a manager a bonus of $1,000 for every dollar by which the company’s stock price exceeds some cutoff level. In what way is this arrangement equivalent to...

Q: Consider the following options portfolio: You write a November 2019 expiration

Consider the following options portfolio: You write a November 2019 expiration call option on Microsoft with exercise price $140. You also write a November expiration Microsoft put option with exercis...

Q: The following bond swaps could have been made in recent years as

The following bond swaps could have been made in recent years as investors attempted to increase the total return on their portfolio. From the information presented below, identify possible reason(s)...

Q: Consider the following portfolio. You write a put option with exercise

Consider the following portfolio. You write a put option with exercise price $90 and buy a put with the same expiration date with exercise price $95. a. Plot the value of the portfolio at the expirat...

Q: A put option with strike price $60 trading on the Acme

A put option with strike price $60 trading on the Acme options exchange sells for $2. To your amazement, a put on the firm with the same expiration selling on the Apex options exchange but with strike...

Q: You buy a share of stock, write a one-year

You buy a share of stock, write a one-year call option with X = $10, and buy a one-year put option with X = $10. Your net outlay to establish the entire portfolio is $9.50. What is the payoff of your...

Q: Joe Finance has just purchased a stock-index fund, currently

Joe Finance has just purchased a stock-index fund, currently selling at $2,400 per share. To protect against losses, Joe plans to purchase an at-the-money European put option on the fund for $120, wit...

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

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 th...