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  • Feb 21, 2011, 01:46 PM
    arekalil
    Call and Put Options Please Help!!
    I have tried everything to figure this problem out. Please Help!

    General Electric: (GE) Last trade 16.16 (10/08/2009)

    CALL OPTIONS PUT OPTIONS

    Strike Last Vol Open Int Strike Last Vol Open Int
    11 5.19 32 13,269 11 0.09 83 76232
    12 4.35 36 28,695 12 0.14 90 46863
    13 3.4 74 27,751 13 0.25 200 46412
    14 2.58 173 69,209 14 0.42 161 34042
    15 1.83 1,310 66,182 15 0.68 215 56043
    16 1.2 235 43,143 16 1.1 580 34902
    17 0.81 3,926 55,078 17 1.68 3074 20107
    18 0.49 214 30,421 18 2.44 43 5770
    19 0.31 154 10,829 19 3.05 15 2243
    20 0.2 1,346 108,704 20 3.95 108 6255
    21 0.13 5,873 2,669 21 5.1 46 638
    22.5 0.1 4 6,482 22.5 6.3 46 1459
    25 0.06 24 3,211 25 8.6 110 2092

    General Electric: (GE) Last trade 16.16 (10/08/2009)

    Assume "Last" column the price where you can buy and sell that particular option or options.
    Assume no commission or other costs.
    Assume one option contract is based on 100 shares of stock; if the contract is $2.00 that means $2 times 100 shares = $200
    "Vol" means the number of contracts, for that specific day, traded in the market.
    "Open Int" means the number of contracts outstanding after that days trade volumes are considered. Open Int of 50 means there are
    50 contracts where someone has sold them (sellers are considered "short" the contract) and 50 contracts where someone owns them.
    Buyers are considered "long" the contract.
    Assume no commissions in any calculation.

    1. If you purchased 1 Call with a 17 strike price and sold 1 call at a strike of 19, what is your total out of pocket expense? (Long Call at 17, short Call at 19)

    2. Assume you purchased 1 Call with a strike price of 15, sold 1 Call with a strike price of 18. At expiration, what is the value of this position if GE is trading at $19 per share?

    3. Assume you purchased 1 Call with a strike price of 14, sold 1 Call with a strike price of 19. At expiration, Ge is trading at $20 per share.
    4. Assume you paid a net of $2.50 for this position. What is your holding period return?


    5. A synthetic long is a combination of two options which represents identical movements in a stock. A synthetic long would be a long call and short (sold) put at the same strike price. If you bought a call with a strike price of $16 and sold a put with a strike price of $16, what is the difference between your out of pocket cost of these two positions as compared to buying the stock alone?
    6. Assume you buy 1 Call with a strike of 17 and buy 1 Put with a strikeof 16. What is your upside and downside breakeven?(Where does GE need to be trading to breakeven on this trade?)

    7. Assume you sell 1 Call with a strike of 17 and buy the stock at current market price. What is your upside and downside breakeven? (Where does GE need to be trading to breakeven on this trade?)







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