Protected put, Financial Management

Assignment Help:

Protected Put

A protected put would involve a long put and a long stock.

For example - ONGC.

Underlying stock = Rs. 809

Buy Mar Rs. 900 Put @ Rs.68.8

 

Total cost is Rs. 877.8

Maximum Profit: Unlimited

Maximum Loss: Limited

Strike Price - Stock Purchase Price + Premium Paid = 900 - 809 + 68.8 = Rs.159.8

This presents an arbitrage opportunity since the stock is purchased at Rs. 809 and if the Put option is still in-the-money at the expiry, an arbitrage of Rs.22.2 is available.

 

 


Related Discussions:- Protected put

Calculate the quality spread differential, Alpha and Beta Companies can bor...

Alpha and Beta Companies can borrow at the subsequent rates.                                                            Alpha               Beta Moody's credit rating

Prepare a report for the managing director, The Managing Director of your f...

The Managing Director of your firm is thinking aloud about an appropriate gearing level for the company: "The consultants I spoke to yesterday explained that some theorists adva

Statement of cash flows, Statement of Cash Flows A formal statement of ...

Statement of Cash Flows A formal statement of the cash received and disbursed through an organization. The statement of cash flows is separate into three sections that are inve

Debt and payment, Jane has agreed to sell her Porshe 911 Cabriolet worth RM...

Jane has agreed to sell her Porshe 911 Cabriolet worth RM1.3 million to Lim for the price of RM 500,000. The decision was made rather hastily as Jane need money to pay her creditor

Analysis of company position, Analysis of Company Position Associated ...

Analysis of Company Position Associated International Supplies Ltd Circulation: Associated International Supplies Ltd (AIS Ltd.) Author: A. Consultant, AXY Consultin

Difference between transaction and translation risk, Question: You have...

Question: You have been appointed as the head of the treasury of Platza International, an automobile firm with many subsidiaries abroad. The management of Platza International

Define the term corporate and financial relations, Question: (a) Define...

Question: (a) Define the term "corporate and financial relations" and clearly state its components. (b) By using one example, identify the steps required to establishing cor

How to solve problems, I need help solving problems for learning financial ...

I need help solving problems for learning financial management?

Write Your Message!

Captcha
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