TJH call option, Wyslow, Inc., PLT stock, Blue Light Special

8) You purchased six TJH call option contracts with a strike price of $40 when the option was quoted at $1.30. The option expires today when the value of TJH stock is $41.90. Ignoring trading costs and taxes, what is your total profit or loss on your investment?

9) Several rumors concerning Wyslow, Inc. stock have started circulating. These rumors are causing the market price of the stock to be quite volatile. Given this situation, you decide to buy both a one-month put and a call option on this stock with an exercise price of $15. You purchased the call at a quoted price of $.20 and the put at a price of $2.10. What will be your total profit or loss on these option positions if the stock price is $4 on the day the options expire?

10) You sold ten put option contracts on PLT stock with an exercise price of $32.50 and an option price of $1.10. Today, the option expires and the underlying stock is selling for $34.30 a share. Ignoring trading costs and taxes, what is your total profit or loss on this investment?

11) The assets of Blue Light Specials are currently worth $2,100. These assets are expected to be worth either $1,800 or $2,300 one year from now. The company has a pure discount bond outstanding with a $2,000 face value and a maturity date of one year. The risk-free rate is 5%. What is the value of the equity in this firm?

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8) You purchased six TJH call option contracts with a strike price of $40 when the option was quoted at $1.30. The option expires today when the value of TJH stock is $41.90. Ignoring trading costs and taxes, what is your total profit or loss on your investment?

Total price for using call option = (40 + 1.30) x 6 options x 100 shares/option
= 24,780
Total value of TJH stock = 41.90 x 6 options x 100 shares/option
= 25,140
Total profit = 25,140 - 24,780 = 360 or (360/600 shares = 0.60/share)

9) Several rumors concerning Wyslow, Inc. stock ...

Solution Summary

This solution is comprised of a detailed explanation to answer what is your total profit or loss on your investment, what will be your total profit or loss on these option positions if the stock price is $4 on the day the options expire, and what is the value of the equity in this firm.

OK, please correct me if I am wrong, but a put option is when your stock is sold automatically when the price drops below a certain level.
a call is the option to purchase stock at a given price.
If you have the amount that a put option would cost - how would you figure out what a call option would cost?
3 month put optio

8-1
A call option on Bedrock Boulders stock has a market price of $7. The stock sells for $30 a share and the option has an exercise price of $25 a share.
a. What is the exercise value of the call option?
b. What is the premium on the option?
8-3
Assume that you have been given the following information on Purcell I

In a thin water film in air, there are exactly 80 wavelengths of bluelight inside the film. the reflected light from the two surfaces of the film will
a. be deficent in bluelight
b. be brightest in the blue part of the specrtum
c. have the normal amount of bluelight
d. none of the above

The exercise price on one of ORNE Corporation's call options is $30 and the price of the underlying stock is $35. The option will expire in 25 days. The option is currently selling for $5.50.
a. Calculate the option's exercise value?
b. What is the value of the premium over and above the exercise value? What does t

A call option on Bedrock Boulders stock has a market price of $7. The stock sells for $30 a share, and the option has an exercise price of $25 a share.
a. What is the exercise value of the call option?
b. What is the premium on the option?

B&R, a reputable East Coast Bank, has created a portfolio of assets that is selling quite well on the market. This particular portfolio is a series of call options. In particular, the portfolio contains one call option for every year from now into the infinite future. Each call option gives the owner the right to buy 1 share

1) AKX stock is currently trading at $50 today and in one period will either be worth 20% more or 20% less. The risk-free rate is 4%. What is the value of an at the money call option?
A. $5.77
B. $6.00
C. $6.67
D. $10.00
E. $20.00

P15-16. Explain the following paradox. A put option is a highly volatile security. If the underlying stock has a positive beta, then a put option on that stock will have a negative beta (because the put and the stock move in opposite directions).
According to the CAPM, an asset with a negative beta, such as the put option, has