Use the following option quotes to answer questions #24 through #29. Call Put Op
ID: 2650181 • Letter: U
Question
Use the following option quotes to answer questions #24 through #29.
Call Put
Option Strike Exp. Vol. Last Vol. Last
Cisco 15.00 Oct. 491 2.26 559 0.25
16.30 15.00 Nov. 259 2.90 154 1.00
16.30 17.50 Oct. 680 0.85 522 1.60
16.30 17.50 Nov. 142 1.33 40 2.31
16.30 17.50 Feb. 51 1.95 28 3.77
16.30 20.00 Oct. 828 0.30 915 4.05
16.30 20.00 Nov. 123 0.55 212 4.67
28. Suppose you bought 20 Cisco Oct 15 call contracts. Just before the option expires, the stock is selling for $18. What is your net profit (or loss)? Ignore transaction costs.
a.
Explanation / Answer
Answer 28)
1 call option with strike price X = 15, is an option to buy at 15
Now , if the stock price is 18 then profit by buying @ 15 and selling @ 18 is ( 18-15 ) = 3
Given 20 such options , Profit = 20 * 3 = 60
and with a lot of 100 the profit is = 60 * 100 = $6000
Answer 29)
1 Put option with strike price X = 20, is an option to sell at 20
Now , if the stock price is 19 then profit by buying @ 19 and selling @ 20 is ( 20-19 ) = 1
Given 10 such options , Profit = 10 * 1 = 10
and with a lot of 100 the profit is = 10 * 100 = $1000