Exam 15: Stock Options

You own 200 shares of Delta stock, which is currently worth $33 a share. You just paid an option premium of $.55 to buy two put contracts on this stock with a strike price of $30. What is the maximum loss per share you are avoiding by purchasing the option contract?

Which one of the following terms is defined as the payoff that would be received if an option were expiring immediately?

What is the total amount you will receive if you sell 10 June $27.50 puts on Texas Instruments? $\text { Iexas Instruments (TXN) }$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text {CALL}$ $\quad$ $\quad$ $\quad$$\text {PUT}$ Exp Strike Bid Ask Bid Ask May 25.00 6.60 6.70 N/A .01 Jun 25.00 6.50 6.75 N/A .03 Oct 25.00 6.95 7.25 .39 .42 May 27.50 4.10 4.15 N/A .01 Jun 27.50 4.05 4.30 .07 .10

Which one of the following options is out of the money?

Which one of the following terms is defined as an option that would have a positive payoff if exercised now?

Selling a call option on stock which you own is referred to as which one of the following strategies?

You are buying the June call on General Electric stock at $.19. What amount will you pay per share if you decide to exercise this option? $\text { General Electric }$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text {CALL}$ $\quad$ $\quad$ $\quad$$\text {PUT}$ Exp Strike Bid Ask Bid Ask Jun 32.50 .68 .70 .70 .73 Sep 32.50 1.60 1.62 1.64 1.68 Jun 34.00 .18 .19 1.73 1.77 Sep 34.00 .93 .95 2.52 2.56

A stock is currently selling for $21. A 3-month call option with a strike price of $20 has an option premium of $1.30. The risk-free rate is 3% and the market rate is 8%. What is the option premium on a 3-month put with a $20 strike price? Assume the options are European style.

Consider both a European put and call that expire in December and have strike prices of $25. The no-arbitrage relationship between this put and call is referred to as which one of the following?

You purchased a put with a strike price of $37.5 and an option premium of $.45. You simultaneously bought the stock at a price of $36 a share. What is your profit per share on these transactions if the stock price at expiration is $33.50 a share?

Which one of the following is defined as an option that can only be exercised at expiration?

You own 3 SPX put options with a strike of 1850. What is the payoff at maturity for this option contract if the S&P 500 index is 1862?

Katie purchased 6 call options on Atlas Co. stock with a strike price of $40. On the expiration date, the stock was priced at $38.95 a share. What is the total payoff on the option contracts?

A stock is currently selling for $26.50. A 3-month put option with a strike price of $30 has an option premium of $4.05. The risk-free rate is 3% and the market rate is 9.75%. What is the option premium on a 2-month call with a $30 strike price? Assume the options are European style.

Which of the following characteristics are correct regarding the new style option quotation system? I. The system is known as OPRA - the Options Price Reporting Authority code. II. The system has 3 data elements. III. The system has 21 characters. IV. The system has 5 characters. V. The system is known as the OCC Series Key. VI. The root symbol is the underlying stock's ticker symbol.

You wrote a $40 call option on a stock that has a market price of $43. Which one of the following statements must be correct if the option expires three months from now?

Which one of the following guarantees that the terms of an exchange-listed option contract are fulfilled when an option is exercised?

Rosalita purchased a put option with a strike price of $47. She paid a total of $150 for the contract. What is the break-even stock price?

A cash-settled option is defined as an option that ________

Which one of the following is a bull call spread?