HW No. 3.Due in class T FEB 16
p1 of 2
Study Chapter 10 in the text book and answer
the following problems:
Q1.
8.2;
Q2.
8.12;
Q3.
8.23 – Do it all per share. Also, do
only the first part of the problem. I.e., ignore
the last sentence of the problem.
Q4.
10.10 – for both spreads, show
tables of cash flows and graph the P?L
profiles.
Use the table of prices on the next page in order
to solve Q5. – Q8 on the next page.
p2 of 2.
Q5. Consider the following strategy:
[Buy the stock and sell the APR, K=30 call]
a.
Show the complete table of cash flow and the P/L at expiration.
b.
Graph the P/L of the above strategy at expiration.
Q6. Consider the following strategy:
[Buy the OCT, K=25 put and sell the OCT, K=30 put]
a.
b.
Show the complete table of cash flow and the P/L at expiration.
Graph the P/L of the above strategy at expiration.
Q7. Consider the following strategy:
[Buy the APR K=32.5 put and sell the APR, K=30 put]
a.
b.
Show the complete table of cash flow and the P/L at expiration.
Graph the P/L of the above strategy at expiration.
Q8. Consider the following strategy:
[Buy the stock and buy the APR K=20 put and sell the APR, K=35 call]
a.
b.
Show the complete table of cash flow and the P/L at expiration.
Graph the P/L of the above strategy at expiration.
S = 27.50
MMM; WED August 25 2009.
CALLS - LAST
PUTS - LAST
K
SEP
OCT
JAN
APR
SEP
OCT
JAN
APR
20
---
---
8.50
---
---
---
.35
1.00
25
3.50
3.80
---
---
.15
.50
---
---
27.5
1.35
---
---
---
.55
---
---
---
30
---
1.70
---
2.40
---
2.75
---
4.20
32.5
.45
.75
---
1.30
5.85
---
---
8.75
35
.05
.35
.75
1.00
8.10
8.85
9.50
---