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"(1) Net profit/loss at a particular stock price....

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"(1) Net profit/loss at a particular stock price. Please WRITE OUT ALL STEPS. Giving me only the final answer for profit/loss WILL NOT BE SUFFICIENT for the full credit. (50 points) (2) Provide an option graph based on the stock price and profit (loss) data points that you calculated in (1) and indicate: (i) the Breakeven price, (ii) the region where the option will be at-the-money, (iii) the region where the option will be out-of-the-money; (iv) the region where the option will be in-the-money (30 points) (3) Indicate the maximum gain and maximum loss for the option position. (20 points) 1. Writing Call Options (SHORT CALL): A call option on Illinois stock specifies an exercise price of $40 and the premium on the call option is $5. Calculate the net profit or loss per share to be earned by this short call position assuming that the stock price is as follows: S $30 $35 $40 $45 $50

 

Paper#5656 | Written in 18-Jul-2015

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