Exam 15: Stock Options

You own 200 shares of Allen Bros.stock.Which one of the following would allow you to receive an option premium in exchange for selling your shares in Allen Bros.at the strike price?

You own 200 shares of Delta stock which is currently worth $33 a share.You just paid an option premium of $0.55 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?

A stock is currently selling for $21.00.A 3-month call option with a strike price of $20 has an option premium of $1.30.The risk-free rate is 3 percent and the market rate is 8 percent.What is the option premium on a 3-month put with a $20 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.

Which one of the following is the upper price bound for the intrinsic value of a European call option on a stock?

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

Laney just purchased 3 call option contracts on Microsoft stock.How many shares of stock can she buy at the strike price based on these contracts?

A call option has a premium of $0.60,a strike price of $40,and 3 months to expiration.The current stock price is $39.60.The stock will pay a $0.80 dividend two months from now.The risk-free rate is 3 percent.What is the premium on a 3-month put with a strike price of $40? Assume the options are European style.

Which one of the following statements is true?

Katie purchased 6 call options on Atlas Co.stock with a strike price of $40.00.On the expiration date,the stock was priced at $38.95 a share.What is the total payoff on the option contracts?

Which of the following characteristics are correct regarding the old 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.

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 percent and the risk-free rate is 3.25 percent.What is the price of a European 3-month put option with a $25 strike price?

A call option with 6 months to expiration currently sells for $2.05.A put option with the same expiration sells for $0.60.The options are European style.The risk-free rate is 3.0 percent and the strike price of both options is $50.What is the current stock price?

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

You own 6 put option contracts on JL Industrial stock.You paid an option premium of $0.85 for a strike price of $37.50.On the option expiration date,the stock was selling for $35.00 a share.What is your percentage return?

What is the total amount you will receive if you sell 10 June $27.50 puts on Texas Instruments?

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

Which of the following has the obligation to purchase stock at the strike price when an option is exercised?

You purchased 5 put option contracts on Mountain Builders stock at an option premium of $0.70.The strike price is $30.What is your break-even stock price?

Jenny purchased 2 put option contracts on Winslow Mfg.stock.The option premium was $0.80 and the strike price was $37.50.On the expiration date,the stock was selling for $38.00 a share.What is the total payoff on the option contracts?