Purchase Solution

Garner Stock: Puts and Calls Options

Not what you're looking for?

Ask Custom Question

The stock price of Garner stock is $40. There is a call option on Garner stock that is at the money, with a premium of $2.00. There is a put option on Garner stock that is at the money, with a premium of $1.80. Why would investors consider writing this call option and this put option? Why would some investors consider buying this call option and this put option?

Please be very specific in answering the questions and explain in simple terms.

Purchase this Solution
Solution Summary

This solution is composed of a 140 word response which discusses the concept of premiums and stock options. Although this discussion is brief, it is easily understandable and clearly responds to the inquiries being addressed.

Solution Preview

When stock has a premium, it means that investors will gain from selling the options. If the investors expected that the stock price would remain somewhat stable, they could benefit from selling both options. They ...

Purchase this Solution
Free BrainMass Quizzes
Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

View More Free Quizzes
Related BrainMass Solutions

  • trades

    If the calls were trading at $10 and the puts at $3, what trades would you enter into? (b). If the calls were trading at $5 and the puts at $5, what trades would you enter into?

  • Investment - Call & Put Option and Short Sale strategies

    Another plan I didn't discuss is one in which he trades options (either calls or puts) against his long position with no intent to sell the AA stock. It is simply used for collateral. If he had sold a call, he could buy it back later for a gain.

  • Call and Put Option Contracts

    Calls Puts Option and NY Close - Expiration -Strike Price - Vol. Last - Vol.

  • Put and Call Options, Futures

    You observe a derivative contract (some unknown combination of calls, puts, written calls, written puts) that pays off $90 if platinum is selling for $850 in a year and pays off $110 if is selling for $750.

  • Options Pricing

    summary of options purchased at beginning of 4th quarter with 3 months to expiration (european style options) position shares premium strike price long calls 63,000 $20.45 $110 long puts 63,000 $13.15 $110 beginning end 4th Quarter

  • Stock options for Rick Thompson's investments

    A similar argument could be made for buying puts or selling calls. In a 584 word discussion, the three propsed option strategies are discussed and a conclusion is presented.

  • Call/Put Options, Net Present Value, Put-call parity

    The idea is that you will get the pre-retiree to simultaneously purchase put options and sell call options on the stock of the company. The proceeds from selling the calls equals the cost of the puts - hence, no cost today.

  • The use of derivatives in risk management

    Selling CALLS provides much the same result as buying PUTS and visa versa. If you sell a PUT, the buyer is paying you for the right to sell their stock at the stated price.

  • options: puts and calls

    475560 It's about options: puts and calls Luke's quandary: to hedge or not to hedge A little more than 10 months ago, luck, a mortgage banker in phoenix, bought 300 shares of stock at $40 per share.

View More Related Solutions