Calculate the option profit to the trader

Assignment Help Financial Management
Reference no: EM131061056

It is July and a trader buys 100 December call options with a strike price of $26. The stock price is $26.51 and the option price is $4.12. At the expiration, the stock price becomes $30.22. Calculate the option profit to the trader. Please show your work.

Reference no: EM131061056

Questions Cloud

Business continuity-disaster recovery reference center : You will be required to integrate an onlineresource in your final submission. The Business Continuity & Disaster Recovery Reference Center is a good online database for this course project.
Higher price equal to the old market price plus the tax : If a tax is levied on the output of a competitive firm, the firm acts as though A. Its marginal cost has increased at all output levels by the amount of the tax. B. The price of its output has risen by the amount of the tax. C. The government is enco..
Preferred stock outstanding-income and expenses : The Fitness Studio, Inc.'s, 2012 income statement lists the following income and expenses: EBIT = $778,000, interest expense = $190,000, and taxes = $205,800. The firm has no preferred stock outstanding and 100,000 shares of common stock outstanding...
Elevators back down to the ground : Each elevator stops at two observation levels - Level 1 at a height of 100 feet, and Level 2 at a height of 400 feet.  After spending time enjoying the view(s), tourists take one of the elevators back down to the ground.
Calculate the option profit to the trader : It is July and a trader buys 100 December call options with a strike price of $26. The stock price is $26.51 and the option price is $4.12. At the expiration, the stock price becomes $30.22. Calculate the option profit to the trader. Please show your..
Critically evaluate the project management issues : The assignment comprises a 2,000-word group report. you are required to identify and critically evaluate the project management issues that lead to the failure of a business project
What was your dollar return and percent return : A corporate bond that you own at the beginning of the year is worth $945. During the year, it pays $59 in interest payments and ends the year valued at $935. What was your dollar return and percent return?
Specifically by anthropogenic activities : 1. Explain VOC and SVOC and discuss their potential sources as related to indoor air quality. 2. Summarize how and what type of hydrocarbons may be formed specifically by anthropogenic activities.
The stocks current price : A stock is expected to pay the following dividends: $1.30 4 years from now, $1.60 5 years from now, and $1.90 6 years from now, followed by growth in the dividend of 8% per year forever after that point. There will be no dividends prior to year 4. Th..

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate the selling corporations tax bill

Last year the Selling Corporation had earnings before interest and taxes (operating income) equal to $1 million. It paid $200,000 in dividends to its stockholders and $100,000 in interest to its creditors. During the year, the company also repaid a b..

  Appropriate discount rate for this type of project

If you were the CEO, would you approve this proposal? Why or why not?

  What is the accumulated sum of the stream of payments

What is the accumulated sum of the following stream of payments? $1,831 every year at the end of the year for 5 years at 7 percent, compounded annually.

  Calculate the firms operating and cash cycles

Using the information below, calculate the firm’s operating and cash cycles.

  Market and book ratio-what is its debt-to-capital ratio

Bartley Barstools has a market/book ratio equal to 1. Its stock price is $12 per share and it has 5.2 million shares outstanding. The firm’s total capital is $135 million and it finances with only debt and common equity. What is its debt-to-capital r..

  Difference between the present values of investment

Consider two investments that you can make. You can either buy a share of stock in a company that will pay a dividend of $ 46 every year into the foreseeable future, or a buy a special type of bond that will start paying the same $ 46 in one year, ca..

  Determine the present value of the bond payments

Determine the present value of the bond payments; that is B(C). Remember the coupon is paid every six months and determine the present value of the annuity. Remember the annuity is paid every quarter.

  What was your total real return on investment

You bought one of Great White Shark Repellant Co.’s 6.8 percent coupon bonds one year ago for $1,054. These bonds make annual payments and mature 15 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is..

  The target cash balance is reached when

The target cash balance is reached when:

  Calculate the standard deviation of the two-asset portfolio

Assume Marvin's Section 401(k) plan balance of $10,000 is equally invested in two mutual funds. Mutual Fund A has a standard deviation of 8%, and Mutual Fund B has a standard deviation of 11%. Assume the correlation coefficient of the funds is 75%. C..

  Estimate of the stocks current price

A company currently pays a dividend of $2.25 per share (D0 = $2.25). It is estimated that the company's dividend will grow at a rate of 22% per year for the next 2 years, then at a constant rate of 7% thereafter. The company's stock has a beta of 1.2..

  Planning to save for retirement

You are planning to save for retirement over the next 30 years. To do this, you will invest $700 a month in a stock account and $300 a month in a bond account. The return of the stock account is expected to be 11% APR compounded monthly, and the bond..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd