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Suppose you are given the following information:

Current Price of the PX stock: $161.37 Strike Price of a 1 year call option: $165 Market Price (premium) of the call option: $7.89 Strike Price of a 1 year put option: $165 Market Price (premium) of the put option: $18.80

(a) What is the maximum amount the buyer of the call option can gain (per share)?

(b) What is the maximum amount the seller of the call option can lose (per share)?

Suppose at the expiration date (after 1 year has elapsed), the price of the stock is at $150

(d) What is the profit(loss) per share if an investor had purchased the shares today?

(e) What is the profit/loss per share if the investor had purchased a put option contract?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92828275

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