Please answer the following questions: 3. Suppose you purchase one Texas Instrument August 85 call...
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Please answer the following questions:
3. Suppose you purchase one Texas Instrument August 85 call contract quoted at $8.50 and write one Texas Instrument August 95 call contract quoted at $5. If, at expiration, the price of an Texas Instrument stock is $91, what would the rate of return be?
4. George Evans is currently bullish on the common stock of the Franklin Corporation. Franklin's current price is $75 and a 3 month call with an exercise price of $75 is selling for $2. Ignore commissions and taxes. (a) if Evans purchases the call and he price of the stock falls to $71 after 3 months, what kind of return will he make? (b) what kind of return would he make if the price rose to $78?
5. You wrote one IBM October 160 put option for a premium of $6.62. What is your max possible profit?
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