The Following Prices Are Available for Call and Put Options

question 24

Multiple Choice

The following prices are available for call and put options on a stock priced at $50.The risk-free rate is 6 percent and the volatility is 0.35.The March options have 90 days remaining and the June options have 180 days remaining.The Black-Scholes model was used to obtain the prices.
Use this information to answer questions 1 through 20.Assume that each transaction consists of one contract (for 100 shares) unless otherwise indicated.
Answer questions 12 through 17 about a long straddle constructed using the June 50 options.
-Suppose a put is added to a straddle.This overall transaction is called a strip.Determine the profit at expiration on a strip if the stock price at expiration is $36.

• A)-$129
• B)$1,416
• C)$429
• D)$1,384
• E)none of the above

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Definitions:

Driveline Torsionals

Twisting forces transmitted through the driveline components of a vehicle, affecting its performance and durability.

Engine Torsionals

Twisting forces generated within an engine, particularly in the crankshaft, due to the power strokes of the pistons.

Clutch Chatter

The occurrence of shaking or rapid vibrations from the vehicle's clutch during engagement, often due to surface irregularities.

High Gear Ratios

Refers to the gearing configuration offering high speed but lower torque output in a transmission system.