option strategy

Navigate to www.google.com/finance (链接到外部网站。) and type in “AAPL” in the search bar at the top of the screen. Select “Option Chain” in the left column. Choose a strike month that is at least 2 months away from today.

 

1. Choose any call contract that is out of the money. This means a strike price that is above the current market price.Use the snipping tool (not a screen shot) of the options chain showing the contract you selected and include it in your MS Word document labeled as “Exhibit A”. The call buyer will be transacting at the ask price and a call seller will be transacting at the bid price. Calculate from the perspective of a call buyer the breakeven point, max profit, and max loss. Calculate for a call seller (at the same strike price) the breakeven point, max profit, and max loss. This portion of the assignment is worth 2 points.

 

2. Choose any put contract that is out of the money. Choose a strike month that is at least 2 months away from today. Choose any put contract that is out of the money. This means a strike price that is below the current market price.Use the snipping tool (not a screen shot) of the options chain showing the contract you selected and include it in your MS Word document labeled as “Exhibit B”. The put buyer will be transacting at the ask price and a put seller will be transacting at the bid price. Calculate from the perspective of a put buyer the breakeven point, max profit, and max loss. Calculate for a put seller (at the same strike price) the breakeven point, max profit, and max loss. This portion of the assignment is worth 2 points.

 

I have had previous students organize their findings using the table below. This is a great way to organize your thoughts and answers. You can apply the same organizational logic to steps 3-5 below as well. You should include a discussion of the strategy and why an investor would want to use this SPECIFIC STRATEGY.

3. Using Apple, construct a long straddle strategy using real options contracts. Discuss why an investor would want to use this strategy. Show the mathematical breakeven point, max profit, and max loss for the strategy. This portion of the assignment is worth 2 points. Use a similar matrix display as shown above for your MS Word document.

 

4. Using Apple, construct a bull call spread strategy using real options contracts. Discuss why an investor would want to use this strategy. Show the mathematical breakeven point, max profit, and max loss for the strategy. This portion of the assignment is worth 2 points. Use a similar matrix display as shown above for your MS Word document.

 

5. Using Apple, construct a collar strategy using real options contracts. Discuss why an investor would want to use this strategy. Show the mathematical breakeven point, max profit, and max loss for the strategy. This portion of the assignment is worth 2 points. Use a similar matrix display as shown above for your MS Word document.

 

Required Formatting:

You need to write a 1-2 page, single-spaced paper detailing what you have discovered. Your document should be in Times New Roman, 12 point font with 1-inch margins. Type your name and the assignment’s name in the Header (“Insert” tab, then select “Header” in MS Word). Do not include a heading in the body of your text to fill space…I will remove it when determining the length requirement. 

After you have constructed each of these options strategies, compile your findings in a Word DOCUMENT and submit.