BF 722 Chapter 15 Problems
Turn back to Figure 15.1 which lists the prices of various IBM options.
Use the data
in the figure to calculate the payoff and the profits for investments in each of the
following July expiration options assuming that the stock price on the expiration date is
Call option, X = 90
X = 90
Call option, X = 95
Put option, X = 95
Call option, X = 100
Put option, X = 100
An investor buys a call at a price of $4.50 with an exercise price of $40.
At what stock
price will the investor break even on the purchase of the call?
You establish a straddle on Intel using September call and put options with a strike
price of $50.
The call premium is $4.25 and the put premium is $5.00.
What is the most you can lose on this position?