Realize the same value as that derived from stock ownership

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Reference no: EM132029694

1. You wrote six call option contracts on MNO stock with a strike price of $75 and an option price of $4.15. What is your total net profit or loss on all transactions related to this investment if the price of MNO is $78.20 on the option expiration date? Ignore taxes and transaction costs

A. Net loss of $570

B. Net profit of $4,410

C. Net profit of $570

D. Net loss of $4,410

2. You can realize the same value as that derived from stock ownership if you:

A. buy a call option and buy a put option on a stock and also lend out funds at the risk-free rate.

B. borrow funds at the risk-free rate of return and invest the proceeds in equivalent amounts of put and call options.

C. sell a put and buy a call on a stock as well as invest at the risk-free rate of return.

D. sell a put option and invest at the risk-free rate of return.

3. You buy one put option contract on a stock with exercise price of $55 at a put premium of $2.35. You also buy two call option contracts on the same stock with exercise price of $55 and a call premium of $3.18. Calculate the profit you make on your strategy if the stock price at the expiration of the contracts is $66 per share.

A. $1,329

B. $547

C. $1,166

D. $811

4. You buy 3 put contracts at a put premium of $1.79 and exercise price of $55. If, at expiration of the option, the underlying asset's price is $56.50, what is your profit?

A. -$87

B. -$537

C. $237

D. $427

Reference no: EM132029694

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