Reading 75: Risk Management Applications of Option Strateg

答案和详解如下：

6.A put on Stock X with a strike price of $40 is priced at $3.00 per share; while a call with a strike price of $40 is priced at $4.50. What is the maximum per share loss to the writer of the uncovered put and the maximum per share gain to the writer of the uncovered call?

A)                                        $37.00   $35.50

B)                                        $37.00   $4.50

C)                                        $40.00   $4.50

D)                                        $40.00   $40.00

The correct answer was B)

The maximum loss to the uncovered put writer is the strike price less the premium, or $40.00 - $3.00 = $37.00. The maximum gain to the uncovered call writer is the premium, or $4.50.

7.Suppose the price of a share of Stock A is $100. A European call option that matures one month from now has a premium of $8, and an exercise price of $100. Ignoring commissions and the time value of money, the holder of the call option will earn a profit if the price of the share one month from now:

A)   increases to $106.

B)   decreases to $94.

C)   increases to $110.

D)   decreases to $90.

The correct answer was C)

The breakeven point is the strike price plus the premium, or $100 + $8 = $108. Any price greater than this would result in a profit, and the only choice that exceeds this amount is $110.

8.Jimmy Casteel pays a premium of $1.60 to buy a put option with a strike price of $145. If the stock price at expiration is $128, Casteel’s profit or loss from the options position is:

A)   $1.60.

B)   $18.40.

C)   $15.40.

D)   $128.00.

The correct answer was C)

The put option will be exercised and has a value of $145-$128 = $17 [MAX (0, X-S)]. Therefore, Casteel receives $17 minus the $1.60 paid to buy the option. Therefore, the profit is $15.40 ($17 less $1.60).

9.Al Steadman receives a premium of $3.80 for shorting a put option with a strike price of $64. If the stock price at expiration is $84, Steadman’s profit or loss from the options position is:

A)   $16.20.

B)   $20.00.

C)   $3.80.

D)   $23.80.

The correct answer was C)

The put option will not be exercised because it is out-of-the-money, MAX (0, X-S). Therefore, Steadman keeps the full amount of the premium, $3.80.

10.Linda Reynolds pays $2.45 to buy a call option with a strike price of $42. The stock price at which Reynolds earns $3.00 from her call option position is:

A)   $2.45.

B)   $47.45.

C)   $3.00.

D)   $42.00.

The correct answer was B)

To earn $3.00, the stock price must be above the strike price by $3.00 plus the premium Reynolds paid to buy the option ($42.00+$3.00+$2.45).