At what stock price will you break even on purchase of call

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Consider an AAPL stock priced at $145 with a standard deviation of 0.2. The risk-free rate is 0.01. There are put and call options available at exercise prices of 150 and a time to expiration of six months. The calls are priced at $6.28 and the puts cost $10.54. There are no dividends on the stock and the options are European. Assume that all transactions consist of 100 shares or one contract (100 options).

(1) What would be your maximum possible profit if you purchase this call?

(2) What would be your maximum possible loss if you purchase this call?

(3) At what stock price will you break even on the purchase of the call?

(4) What would be your profit if you buy a call, hold it to expiration and the stock price at expiration is $160?

(5) What is maximum possible profit of the call writer?

(6) Suppose you constructed a covered call. At expiration, the stock price is $160. What is your profit?

[Refer to end-of-chapter 5 question #6 and the attached excel spreadsheet ‘WMGT Excel Ch 15 Option Strategies (AAPL)’ after putting in appropriate information provided above.]

Reference no: EM131556047

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