Fundamentals of Futures and Options Markets Week 6 Problems

Chapter 11To answer Q1 ­ Q6, please provide graphs showing the relationship between the position profit (Y­axis) and the stock price at expiration (X­axis).Suppose the price of a non­ dividend­ paying stock is currently $50, its volatility is 25%, and the risk­free rate for all maturities is 4% per annum.All the options below expire in 4 months (=4/12 years). The option prices are not given here but you can use Derivagem to find the option prices. Choose “Black­Scholes ­ European” for Option Type in D17 cell. We will learn how to use Derivagem this week. You must include all the Derivagem outputs (6 total) in your Excel file by copying or taking a screenshot.Q1: A bull spread using European call options with strike prices of $45 and $50. (The call price for K=$45 option should be $6.38. If not, double check the parameters you used in Derivagem. See the attached screenshot of derivagem.)Q2: A bear spread using European put options with strike prices of $45 and $50.Q3: A butterfly spread using European call options with strike prices of $45, $50 and $55.Q4: A butterfly spread using European put options with strike prices of $45, $50 and $55. (Hint: The total profit graph should be identical to Q3.)Q5: A straddle using options with a strike price of $50.Q6: A strangle using options with strike prices of $50 and $55.Attached are templates that have been providedQ7 Use put–call parity to show that the cost of a butter?y spread created from European puts is identical to the cost of a butter?y spread created from European calls.Q8 A call with a strike price of $60 costs $6. A put with the same strike price and expiration date costs $4. Construct a table that shows the pro?t from a straddle. For what range of stock prices would the straddle lead to a loss?

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more