From the given data for the Option Contracts, you are required to compute profit or loss for each investor: Type of Option Exercise Price Position of the Investor Stock Price on Expiry Date Option Date Premium Call ₹ 100

CS Executive · Securities Laws and Capital Markets · PYQS · June 2024
From the given data for the Option Contracts, you are required to compute profit or loss for each investor: Type of Option Exercise Price Position of the Investor Stock Price on Expiry Date Option Date Premium Call ₹ 100 Holder ₹ 115 ₹ 5 Call ₹ 100 Writer ₹ 98 ₹ 7 Put ₹ 200 Holder ₹ 205 ₹ 18 Put ₹ 200 Writer ₹ 210 ₹ 12 Call ₹ 500 Holder ₹ 505 ₹ 27

Answer & Explanation:

Type of Option Exercise Price (₹) Position of the Investor Stock Price on Expiry Date (₹) Option Date Premium (₹) Profit/Loss (₹) Call 100 Holder 115 5 15 - 5 = 10 (Profit) Call 100 Writer 98 7 7 (Premium received) Put 200 Holder 205 18 18 Premium (Loss) Put 200 Writer 210 12 12 (Premium received) Call 500 Holder 505 27 5 - 27 = (-22) (Loss) However, call holder may choose not to exercise such right.

Topics: Derivatives Market

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