A) involves exercising two or more options simultaneously. B) is the purchase of both a put and a call on the same underlying asset. C) obtains its maximum profit when the underlying stock price is equal to the strike price. D) involves writing a call on shares of stock you currently own. E) is a highly bullish strategy. A) involves exercising two or more options simultaneously. B) is the purchase of both a put and a call on the same underlying asset. C) obtains its maximum profit when the underlying stock price is equal to the strike price. D) involves writing a call on shares of stock you currently own. E) is a highly bullish strategy.

How much option premium per share will you receive if you sell a September $34 put on General Electric stock? $\text { General Electric }$ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $$\text {CALL}$ $\quad $ $\quad $ $\quad $$\text {PUT}$ $\begin{array}{rrrrrr} \operatorname{Exp} & \text { Strike } & \text { Bid } & \text { Ask } & \text { Bid } & \text { Ask }\\ \text { Jun } & 32.50 & .68 & .70 & .70 & .73 \\ \text { Sep } & 32.50 & 1.60 & 1.62 & 1.64 & 1.68 \\ \text { Jun } & 34.00 & .18 & .19 & 1.73 & 1.77 \\ \text { Sep } & 34.00 & .93 & .95 & 2.52 & 2.56 \end{array}$

A) $1.64 B) $1.68 C) $1.77 D) $2.52 E) $2.56 A) $1.64 B) $1.68 C) $1.77 D) $2.52 E) $2.56

Exam 15: Stock Options

You own 5 put option contracts on JL Industrial stock. You paid an option premium of $1.15 for a strike price of $27.50. On the option expiration date, the stock was selling for $24 a share. What is your percentage return?

(Multiple Choice)

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(87)

Question 81

A stock is valued at $25.80 a share. A European 3-month call option has a strike price of $25 and an option premium of $1.40. The market rate is 9.5% and the risk-free rate is 3.25%. What is the price of a European 3-month put option with a $25 strike price?

(Multiple Choice)

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(80)

Question 82

Amy bought a $50 May call and a $50 May put on the same underlying stock. This strategy is referred to as which one of the following?

(Multiple Choice)

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Question 83

A short straddle:

(Multiple Choice)

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Question 84

Callie purchased 3 call options with a $37.50 strike price and a call premium of $.90. On the expiration date, the underlying stock was priced at $40.20 per share. What is her percentage return on this investment?

(Multiple Choice)

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(91)

Question 85

You wrote a covered call with a strike price of $35 and an option premium of $1.10. Assume the stock price is $34 a share currently and that it falls to $32 a share and remains at that price until the option expires. As a result, you will:

(Multiple Choice)

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Question 86

You purchased 5 put option contracts on Mountain Builders stock at an option premium of $.70. The strike price is $30. What is your break-even stock price?

(Multiple Choice)

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Question 87

A 3-month put has a strike price of $45 and an option premium of $.80. The underlying stock is selling for $45.10 per share. What is the time value of the put?

(Multiple Choice)

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(75)

Question 88

Which one of the following represents an arbitrage opportunity?

(Multiple Choice)

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Question 89

How much option premium per share will you receive if you sell a September $34 put on General Electric stock? $\text { General Electric }$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\text {CALL}$ $\quad$ $\quad$ $\quad$ $\text {PUT}$ 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

(Multiple Choice)

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(73)

Question 90

Which one of the following is the lower price bound for the intrinsic value of an American call option on a stock?

(Multiple Choice)

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(80)

Question 91

You bought a call option with a strike price of $30. What is your total payoff on this option contract if the underlying stock is selling for $31.50 on the option expiration date?

(Multiple Choice)

4.9/5

(68)

Question 92

A call option with 6 months to expiration currently sells for $2.05. A put option with the same expiration sells for $.60. The options are European style. The risk-free rate is 3.0% and the strike price of both options is $50. What is the current stock price?

(Multiple Choice)

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(71)

Question 93

Which one of the following combinations creates an in-the-money option?

(Multiple Choice)

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(86)

Question 94

You bought a call option with a strike price of $40. What is your total payoff on this option contract if the underlying stock is selling for $42.70 on the option expiration date?

(Multiple Choice)

4.9/5

(81)

Question 95

A European 3-month call has a strike price of $35. The stock price is currently $34.30. What is the lower price bound on this call?

(Multiple Choice)

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Question 96

Which one of the following statements is true?

(Multiple Choice)

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Question 97

Which one of the following is equal to the option price minus the intrinsic value?

(Multiple Choice)

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Question 98

A 3-month put has a strike price of $45 and an option premium of $1.10. The underlying stock is selling for $45.80 per share. What is the time value of the put?

(Multiple Choice)

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(91)

Question 99

Which one of the following is the lower price bound for the intrinsic value of an American put option on a stock?

(Multiple Choice)

4.9/5

(88)

Question 100

Showing 81 - 100 of 109

You own 5 put option contracts on JL Industrial stock. You paid an option premium of $1.15 for a strike price of $27.50. On the option expiration date, the stock was selling for $24 a share. What is your percentage return?

A stock is valued at $25.80 a share. A European 3-month call option has a strike price of $25 and an option premium of $1.40. The market rate is 9.5% and the risk-free rate is 3.25%. What is the price of a European 3-month put option with a $25 strike price?

Amy bought a $50 May call and a $50 May put on the same underlying stock. This strategy is referred to as which one of the following?

A short straddle:

Callie purchased 3 call options with a $37.50 strike price and a call premium of $.90. On the expiration date, the underlying stock was priced at $40.20 per share. What is her percentage return on this investment?

You wrote a covered call with a strike price of $35 and an option premium of $1.10. Assume the stock price is $34 a share currently and that it falls to $32 a share and remains at that price until the option expires. As a result, you will:

You purchased 5 put option contracts on Mountain Builders stock at an option premium of $.70. The strike price is $30. What is your break-even stock price?

A 3-month put has a strike price of $45 and an option premium of $.80. The underlying stock is selling for $45.10 per share. What is the time value of the put?

Which one of the following represents an arbitrage opportunity?

Which one of the following is the lower price bound for the intrinsic value of an American call option on a stock?

You bought a call option with a strike price of $30. What is your total payoff on this option contract if the underlying stock is selling for $31.50 on the option expiration date?

A call option with 6 months to expiration currently sells for $2.05. A put option with the same expiration sells for $.60. The options are European style. The risk-free rate is 3.0% and the strike price of both options is $50. What is the current stock price?

Which one of the following combinations creates an in-the-money option?

You bought a call option with a strike price of $40. What is your total payoff on this option contract if the underlying stock is selling for $42.70 on the option expiration date?

A European 3-month call has a strike price of $35. The stock price is currently $34.30. What is the lower price bound on this call?

Which one of the following statements is true?

Which one of the following is equal to the option price minus the intrinsic value?

A 3-month put has a strike price of $45 and an option premium of $1.10. The underlying stock is selling for $45.80 per share. What is the time value of the put?

Which one of the following is the lower price bound for the intrinsic value of an American put option on a stock?

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Stock Price Behavior and Market Efficiency

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Return, Risk, and the Security Market Line

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