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Calculate the maximum loss

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Reference no: EM131093424

1. A call option is purchased for $8 and exercised at its exercise price of 50. About six months later the stock is sold for $100. Calculate total gains or losses.

2. You have written a put option for $4 and it is exercised on you. The exercise price was 50.

a. Determine the cost basis.

b. Later on you sell the stock at $100. Calculate your gain or loss.

3. You expect the price of the stock to rise but in a range of 36 to 43 during the next 6 months.  A call option with exercise price of 35 has a premium (price) of 3 and a call option at exercise price of 45 has a premium (price of 1.50) 

a. Design an option spread (bull call spread) and calculate the net payment for it.

b. Calculate the maximum loss

c. Calculate the maximum gain

Reference no: EM131093424

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