Ch 20 revised

Ch 20 revised - $0 $0 $10,000 $20,000 Bills + 100 options...

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CHAPTER 20: OPTIONS MARKETS: INTRODUCTION 1. Cost Payoff Profit a. Call option, X = $22.50 $2.70 $2.50 -$0.20 b. Put option, X = $22.50 $1.90 $0.00 -$1.90 c. Call option, X = $25.00 $1.50 $0.00 -$1.50 d. Put option, X = $25.00 $3.10 $0.00 -$3.10 e. Call option, X = $27.50 $0.75 $0.00 -$0.75 f. Put option, X = $27.50 $4.80 $2.50 -$2.30 2. In terms of dollar returns, based on a $10,000 investment: Price of Stock 6 Months from Now Stock Price $80 $100 $110 $120 All stocks (100 shares) $8,000 $10,000 $11,000 $12,000 All options (1,000 options)
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Unformatted text preview: $0 $0 $10,000 $20,000 Bills + 100 options $9,360 $9,360 $10,360 $11,360 In terms of rate of return, based on a $10,000 investment: Price of Stock 6 Months from Now Stock Price $80 $100 $110 $120 All stocks (100 shares)-20% 0% 10% 20% All options (1,000 options)-100%-100% 0% 100% Bills + 100 options-6.4%-6.4% 3.6% 13.6% All options All stocks Bills plus options S T 100 100 6.4 Rate of return (%) 100 110 20-1...
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This note was uploaded on 11/02/2011 for the course FIN 300 taught by Professor Staff during the Summer '08 term at Ill. Chicago.

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