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1. Several rumors concerning a stock are causing the market price of the stock to be quite volatile. Given this situation, you decide to buy both a one-month European $25 put and a one-month European $25 call on this stock. The call price per share is $.70 and the put price per share is $1.80. Contracts are on 100 shares. What will be your net profit or loss on these option positions if the stock price is $23 on the day the options expire? Ignore trading costs and taxes.

A. $20

B. -$10

C. $60

D. $50

E. $200

2. You sold five put contracts on CTB stock at an option price per share of $1.90. The options have an exercise price of $45 per share. The options were exercised today when the market price was $39 a share. What is your net profit or loss on this investment? Ignore transaction costs and taxes.

A. -$410

B. -$2,050

C. $3,000

D. $2,850

E. $3,950

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92102754

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