Unformatted text preview: Value of Stock Your Net Profit (Loss) 160 145 130 117 110 100 a) Fill in the empty cells in the table above. b) Briefly describe the point of this strategy. 3. CBOE's Euro Index, EOR, is currently at a level of 94. The threat of political dissent among the members of the European Union makes you uncertain of the direction of the market. You are unsure of the direction for the market in the short term, but believe it will be volatile. You want to take a position that may profit if the EOR moves significantly up or down. You know that the following options on EOR are available: Option Premium Strike Expiration call 4 93.50 June, 2010 put 3.50 93.50 June, 2010 What type of strategy could you implement using these options that will benefit from significant movements in the EOR between now and June, 2010? Present a table that shows the payoffs from the strategy depending on what happens to the level of EOR at expiration....
View Full Document
- Spring '09
- Strike price, XYZ Price Value, Purdue University Krannert School of Business MGMT