Suppose you are considering selling a one year call options, Ask an Expert

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Suppose you are considering selling a one year call options with a strike price of $80 for a stock that is currently trading at $75. The risk free interest rate is 4%. The cost per option is $8.152, ? = 0.527, G = .018, and ? = -.016.

Suppose that you sell 50 of the call options and want to ? - hedge your position.

a. What is the net cost of your position?

b. Suppose that the next day the price of the stock is $74.50. What is your one day profit or loss?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92843104

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