1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
marysya [2.9K]
3 years ago
10

The common stock of the Avalon Corporation has been trading in a narrow range around $40 per share for months, and you believe i

t is going to move away sharply from the range in the next 3 months. The price of a 3-month put option with an exercise price of $40 is $3, and a call with the same expiration date and exercise price sells for $4. What would be a simple options strategy using a put and a call to exploit your conviction about the stock price's future movement?
A. Sell a call.
B. Purchase a put.
C. Sell a straddle.
D. Buy a straddle.
Business
1 answer:
Monica [59]3 years ago
7 0

Answer:

C. Sell a straddle

Explanation:

Considering the following calculation: Sell a straddle = sell a put + sell a call

and,

Premium income for selling a straddle = (P + C )100 = ($3 + $4)(100) = $700.

a short straddle involves simultaneously selling a put option and call option with the same underlying asset, same exercise price and expiration date

By Selling a 3 month put option with exercise price of $40 one will get $3 (inflow of $3)

Simulatenously By Selling a 3 month call option with exercise of $40 one wiil get $4(inflow of $4)

Thus the total premium income of selling a straddle is $7

You might be interested in
What could happen if you do not keep track of your checks you write?
velikii [3]
Nothing really, you just might have a better idea of your budget if you do.
3 0
3 years ago
An entrepreneur is best described as A. someone that is hired to work in a firm B. someone who creates human capital C. someone
Alik [6]

Answer:

C. someone with the ability to combine other resources in a productive enterprise

Explanation:

An entrepreneur creates a business from scratch and makes it a success. A business begins as an idea that is transformed and developed into a successful enterprise. The entrepreneur forms the ideas and sources for means and ways of actualizing it into a successful venture.

The entrepreneur provides the factors of production required to actualize his or her idea. Entrepreneurship is one of the inputs in production. The entrepreneur put together the other factors of capital, land, and labor and forms an enterprise that produces other goods and services at a profit.

7 0
3 years ago
Demelza purchased her favorite perfume three months ago, J’adore by Dior, for $75. She logs online to purchase one for her frien
Salsk061 [2.6K]

Answer:

Option (d) is correct.

Explanation:

Initial price of perfume three years ago = $75

New price of perfume = $100

Therefore,

Percentage change in the perfume price:

= [(New price of perfume - Initial price of perfume) ÷ (Initial price of perfume)] × 100

= [($100 - $75) ÷ ($75)] × 100

= 33.33%(approx)

Hence, the percentage change in the perfume price is 33.33%.

8 0
4 years ago
What is the proper adjusting entry at june 30, the end of the fiscal year, based on a prepaid insurance account balance before a
blagie [28]
Debt insurance expenses 6000
Credit prepaid insurance 6000

prepaid insurance account balance after adjustment is
18,500−6,000=12,500
6 0
3 years ago
The current price of Parador Industries stock is $78 per share. Current earnings per share are $5.1, the earnings growth rate is
zalisa [80]

Answer:

1. $5.3

2. 17.95

Explanation:

1. Earning per share today = $5.1

Earning growth in one year = 4%

So, the EPS one-year ahead:

= Earning per share today × (1 +  Earning growth in one year)

= 5.1 × 1.04

= $5.3

2 . Market price one-year ahead:

= Current price × (1 + expected return on Parador stock)

= 78 × 1.22

= $95.16.

P/E Ratio = Market price per share ÷ Earning per share

P/E Ratio = 95.16 ÷ 5.3

                = 17.95

8 0
3 years ago
Other questions:
  • True or false: during deployment of the disaster workforce, the federal coordinating officer has the sole responsibility for fos
    14·1 answer
  • Michaela runs a dog-walking business. She has three employees, and she prides herself in maintaining a high level of customer se
    15·1 answer
  • Warren Co. recorded a right-of-use asset of $780,000 in a 10-year finance lease. The interest rate charged by the lessor was 10%
    8·1 answer
  • Help!!! Extra points to the correct answer! And Brainliest!!
    14·1 answer
  • If the price of coffee cups falls and the consumer decides to buy more coffee cups solely because they are less expensive, this
    11·1 answer
  • On the island of Mabera, the local money is called "favoli." The price of every good in Mabera is expressed as the number of fav
    7·2 answers
  • ________ advertising may use any advertising medium, but it differs from other types of advertising in that it tries to stimulat
    7·1 answer
  • Work and/or assignments performed in a career are _____.
    8·1 answer
  • Help asap plzzzzzzzzzzzzzzzzzzzzzzzzzzz
    10·1 answer
  • Steve silversmith produces unique and exclusive sterling silver rings, pendants, buckles, and chains. steve pays one supervisor
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!