Type of the option contracts

Reference no: EM13826997

Problem:

On Aug 10th, Ali expected that Tower stock price will increase during the coming two months. Therefore, he purchased an option for $4 per share; exercise price was $40 per share, On Sept 20th, Tower stock price was $50 per share.

a. What is the type of the option contracts?

b. Analyze Ali position on Sept. 20th.

c. Analyze writer position on Sept 20th.

Summary

The question belongs to Finance and it discusses about call options which are used for making stock price speculations and gain profit from market movements. Apart from the position of the buyer has also been discussed in the solution.

Total Word Limit: 129 Words

Reference no: EM13826997

Questions Cloud

Write few comments about the art work of banksy : This question related to Arts and it discuss about the street art form of Banksy. Banksy is a popular form of graffiti or street art which is popular in the United Kingdom

Drawbacks of instituting a quality policy : What are some options for ensuring that testing will always be utilized to its fullest abilities. Any well-defined and planned project will have a quality plan in place before development begins.

Calculate direct materials cost and efficiency variances : Assume Davis Consulting Inc has created a standard cost card for each job. Standard direct materials include 14 software packages at a cost of $900 per package. Calculate direct materials cost and efficiency variances. Calculate direct labor cost and..

Can we provide base isolation for high rise buildings : Can we provide base isolation for high rise buildings - Can we provide it for diagrid structures?

Type of the option contracts : On Aug 10th, Ali expected that Tower stock price will increase during the coming two months. Therefore, he purchased an option for $4 per share; exercise price was $40 per share, On Sept 20th, Tower stock price was $50 per share.

Draw and explain the demand curve facing each firm : This problem from economics and it is describe the kinked demand curve, a dilemma in most microeconomic scenarios where two or more competing firms wage price wars and arrive at a price which seems to be kinked when plotted on a graph.

Sunk costs are relevant when making decisions : Sunk costs are relevant when making which of the following decisions?

Describe the organizational systems that are affected : Describe the problems presented in the case study at both the macro and micro level. Describe the causes of the problem. Describe the organizational systems that are affected.

Use of options in stock price speculation : On Oct. 5th, Reem purchased 2500 shares of Mediterranean Co. stocks at €35 per share and 1500 shares of KFD at €28 per share. According to financial analysts' report, in the coming three months Mediterranean and KFD stock prices may decline.

User Account

All Pages