 |  Investments, 4th Canadian Edition, 4/e Zvi Bodie,
Boston University School of Management
Alex Kane,
University of California, San Diego
Alan Marcus,
Boston College
Stylianos Perrakis,
Concordia University
Peter Ryan,
University of Ottawa
Options and Other Derivatives: Introduction
Excel Problems| Prepared by William Lim, University of New Brunswick. Spreads and Straddles -  Click here to download the spreadsheet (45.0K) Problem:
You observe the following prices for LEAPs on Research in Montion. The stock is currently selling for $29.50. | Call | Exercise Price | Premium | Put | Exercise Price | Premium | | | 25 | 9.30 | | 25 | 3.00 | | | 30 | 5.80 | | 30 | 5.10 | | | 35 | 4.00 | | 35 | 9.10 | | | 40 | 2.70 | | 40 | 12.80 |
Using the accompanying spreadsheet, analyze the straddles for 25, 30, 35 and 40 exercise price straddle under the assumption that the ending stock price is $40. What would be a payoff on a bullish spread that was combining the purchase of the 25 Call and the sale or writing the 40 Put. Using the data table function find the profit positions for the 25 Straddle, the 30 Straddle and the above bullish spread. Allow the stock price to range from $5 to $53 in increments of $4. Chart the profit positions in a single graph to compare them. |
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2003 McGraw-Hill Higher Education