Writing naked options
Not what you're looking for?
Assume an investor writes a call option for 100 shares at a strike price of $40 for a premium of 6.5. This is a naked option.
A. What would the gain or loss be if the stock closed at $35?
B. What would the break-even point be in terms of the closing price of the stock?
Purchase this Solution
Solution Summary
Assume an investor writes a call option for 100 shares at a strike price of $40 for a premium of 6.5. This is a naked option.
Solution Preview
The investor's profit will be the premium earned on writing the option, ie, 6.5 as the option will not be exercised by the buyer. The buyer will prefer to purchase the shares in the open market rather ...
Education
- BCom, SGTB Khalsa College, University of Delhi
- MBA, Rochester Institute of Technology
Recent Feedback
- "Thank you. "
- "Thank you"
- "Thank you. I got 20/20 last week for my discussion you help me out with."
- "Thank you. Great Job. "
- "Thank you. Great Job. "
Purchase this Solution
Free BrainMass Quizzes
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Social Media: Pinterest
This quiz introduces basic concepts of Pinterest social media
Operations Management
This quiz tests a student's knowledge about Operations Management
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.