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New Intel Options Hedge Question

New Intel Options Hedge Question - (20 pts Consider the...

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(20 pts) Consider the data in the tables that follow below (on the next page.) Intel Corp. (INTC) 10-18-2007 At 12:57PM ET: 26.6299 0.0901 (0.34%) a) (2 pts) On 10/18/2007 you “shorted” [sold short] 1000 shares of INTEL stock. Not considering commissions, what total sale value did you receive? b) (3 pts) State the wealth value of your short position on 1-22-2008 c) (7pts) As a precaution, on 1-22-2008 you hedged your short position with the “cheapest in the money option.” What was your hedge position and what did that hedge cost? Intel (INTC) Date 1-22-2008 At 10:51AM ET: 18.42 0.58 (3.05%) Options Expiring Fri, Apr 18, 2008 INQDU.X Strike Price Puts Symbol Last Change Bid Ask Volume Open Int Symbol Last Change Bid Ask Volume Open Int NQDV.X 5.95 0.66 6.10 6.25 2 1,447 12.50 NQPV.X 0.14 0.06 0.12 0.13 315 546 NQDC.X 3.85 0.45 3.90 4.00 131 1,335 15.00 NQPC.X 0.37 0.08 0.37 0.39 530 1,716 NQDW.X 2.07 0.33 2.09 2.12 613 2,453 17.50 NQPW.X 1.05 0.20 1.02 1.04 2,048 17,620 NQDD.X 0.91 0.19 0.91 0.92 1,752 14,118 20.00 NQPD.X 2.33 0.28 2.39 2.42 451 18,891 NQDX.X 0.36 0.06 0.33 0.34 721 23,580 22.50 NQPX.X 4.25 0.40 4.30 4.40 39 26,456 INQDE.X 0.12 0.06 0.12 0.14 515 51,508 25.00 INQPE.X 6.65 0.50 6.65 6.75 275 31,354 INQDY.X 0.06 0.02 0.05 0.07 378 34,682 27.50 INQPY.X 8.35 0.00 8.95 9.20 14 19,202 INQDF.X 0.04 0.01 0.03 0.04 111 32,378 30.00 INQPF.X 10.60 0.00 11.45 11.85 4 3,545 Intel Corp. (INTC)
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