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Financial Derivatives Assignment
General Instructions – PLEASE READ THEM CAREFULLY
- The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
- Assignments submitted through email will not be accepted.
- Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
- Students must mention question number clearly in their answer.
- Late submission will NOT be accepted.
- Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. Financial Derivatives Assignment Help
- All answered must be typed using Times New Roman (size 12, double-spaced) No pictures containing text will be accepted and will be considered plagiarism).
- Submissions without this cover page will NOT be accepted.
Assignment 2
Submission Date by students: 17/04/2022-11:59 PM
Place of Submission: Students Grade Centre via blackboard.
Marks: 10 Marks
Assignment Purposes/Learning Outcomes:
CLO-2: Describe trading strategy which incorporates the use of call and put options
CLO-4. Calculate option maximum gain, maximum loss, and breakeven on various options positions
Assignment Question(s): (Marks 10)
Q1.Explain each of the following concepts as they relate to call options. (3 Marks)
- Delta ( 1 Mark)
- Gamma ( 1 Mark)
- Rho ( 1 Mark) Financial Derivatives Assignment Help
Q2.What are the differences among scalpers, day traders, and position traders? (3 Marks)
Q3. Assume the possible stock prices of Hull Inc. are $150, $155, $160, $165, $170, $175, and $180. The price(premium) is $5 for October165 put option of Hull Inc.
Suppose you buy one October 165 put option contract(Np=100) of Hull Inc. and hold it until the options expire.
- a) Determine the profit and loss at respective stock prices of Hull Inc. (2 Marks)
- b) Determine the breakeven stock price at expiration. (1 Mark)
- c) What are the maximum possible profit and loss on this transaction. (1 Mark)
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