Hi, pls help me answer this qn, thanks!! QUESTION 2 (DERIVATIVE SECURITIES) a)...
70.2K
Verified Solution
Link Copied!
Question
Finance
Hi, pls help me answer this qn, thanks!!
QUESTION 2 (DERIVATIVE SECURITIES) a) A fund manager has been monitoring the performance of Virgin Galactic Corporation shares (NYSE: SPCE). The shares are currently trading at $34.8 on the New York stock exchange. The fund manager predicts that SPEC shares might rise in value over the next few months. He checked the market and found the related information on the options with a maturity of two months as below. Assume the number of underlying shares per contract is 100 shares. (i) Please specify the moneyness of the following options. Are they in the money, at the money or out of the money? [3 marks] Moneyness Moneyness Strike $30 $34.5 $38 Call premium $3.05 $3.9 $3.2 Put premium $2.33 $4.5 $7.0 (ii) Which option would you suggest the fund manager to purchase? Why? [2 marks] (iii) How much would it cost if the fund manager purchases options in ii that cover 1,000,000 shares (ii)? [1 marks]
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
