Question on Put options
£10-20 GBP
Paid on delivery
Requirements: (Has to be handwritten) (Has to be completed in 1 or 2 hours maximum)
Part a
Suppose that put options on a stock with strike prices $40 and $45 cost $6 and $9,
respectively.
i. How can the options be used to create a bull spread and a bear spread? Calculate the
initial cashflow of creating each spread.
ii. Construct a table that shows the payoff and profit for both spreads and explain best
and worst possible outcomes for each spread.
Part b
Three put options on a stock have the same expiration date and strike prices of $55, $60,
and $65. The market prices are $6, $7, and $9, respectively.
i. Explain how a butterfly spread can be created. Construct a table showing the payoff
and profit from the strategy.
ii. For what range of stock prices would the butterfly spread lead to a loss?
Part c
Imagine you expect a certain stock price to change significantly in the future. You do not
have a prior judegment on the direction of the price change. Explain the types of option
strategies (choose one spread and one combination) that can be used based on these
expectations.
Project ID: #30258423
About the project
6 freelancers are bidding on average £26 for this job
Sir, I am Accounting, Finance, Cashflows, Balance sheet, Income statement, all accounting related works Advance Level Expert. This is a basic work for me. I can complete this project with in your desired time with ad More
Hello, I understand options strategies and layoff for them. Let me know if I can help you here - Thanks
Hello, I have studied the subject for my Masters and I am currently trading in derivatives. I will complete your work on priority basis and any changes thereafter will also be modified.
Gone through your question ..willing to answer that. if you are interested then we can proceed forward.
I have enough knowledge of derivative valuations and their payoffs in different situations. can help you with the solution
Hello I am interested in the work. can complete the work by the end of day with all explanation as required by you. Thanks and regards Bhanu Prakash
