Options Questions

[howard101]

I have attached a file where I have attempted to answer some questions pertaining to Options questions

It would be appreciated if someone can check & post the correct solution if these are incorrect

Thanks

Howard

 

[nazzdack]

Quote from howard101:
.....Options questions.....

1) The first question appears incorrect. You should calculate the expiration-breakeven-point for each strike-price and then properly draw the P&L lines. You're comparing one-$75-strike-call to three-$85-strike-calls. You seemed to have drawn them parallel, not intersecting. What is a "point of indifference". Is that where they intersect? If so, they should crossover and not be parallel.
2) The second question regarding the short-put seems correct. I didn't look at how you calculated the earned interest of 6% for six months. You wrote "3".

 

[spindr0]

Quote from nazzdack:

What is a "point of indifference"

That's how I feel when someone posts their homework assignment

 

[nazzdack]

Quote from spindr0:
That's how I feel........

Markets need new participants from time to time.

 

[spindr0]

Quote from nazzdack:

Markets need new participants from time to time.

I guess you're not a vegetarian...

(fresh meat)