Homework answers / question archive / assignment 7 In this assignment, follow the steps below and generate the payoff and profit curves for a stock’s options

assignment 7 In this assignment, follow the steps below and generate the payoff and profit curves for a stock’s options

Economics

Share With

assignment 7

In this assignment, follow the steps below and generate the payoff and profit curves for a stock’s options.

1. Pick one stock you are interested in to analyze.

2. Select one call option and one put option for this stock based on your preference on the strike prices and expiration dates. The two options do not need to have the same strike price or expiration date. Collect last price information from Yahoo! Finance for the options selected.

3. In Excel, generate the following charts:

a. A chart to show the payoffs and profits for a long position in the call option selected based on different possible terminal underlying stock price;

b. A chart to show the payoffs and profits for a short position in the call option selected based on different possible terminal underlying stock price;

c. A chart to show the payoffs and profits for a long position in the put option selected based on different possible terminal underlying stock price;

d. A chart to show the payoffs and profits for a short position in the put option selected based on different possible terminal underlying stock prices.

For all charts above, you need to include the calculation details in Excel as the basis to create those charts.

4. Write a brief report in a Word file (400 words minimium)and briefly describe the following items:

• What is your estimation of the future price of the underlying stock on the expiration date of those options selected? Just give a guess with some brief reasoning according to your instincts. No analysis needs to be done for this estimation.
• Based on your estimation of the underlying stock’s future price, use the charts created, draw a conclusion which option you would like to long or short.

check the link below to follow the instructors lectures in order to solve the assignment:

https://we.tl/t-rJgEZEcXog

FIN4453 Financial Modeling and Analytics Xiaomin Guo, Ph.D., CFP® Assignment 7 (5 points) Instructions: In this assignment, follow the steps below and generate the payoff and profit curves for a stock’s options. 1. Pick one stock you are interested in to analyze. 2. Select one call option and one put option for this stock based on your preference on the strike prices and expiration dates. The two options do not need to have the same strike price or expiration date. Collect last price information from Yahoo! Finance for the options selected. 3. In Excel, generate the following charts: a. A chart to show the payoffs and profits for a long position in the call option selected based on different possible terminal underlying stock price; b. A chart to show the payoffs and profits for a short position in the call option selected based on different possible terminal underlying stock price; c. A chart to show the payoffs and profits for a long position in the put option selected based on different possible terminal underlying stock price; d. A chart to show the payoffs and profits for a short position in the put option selected based on different possible terminal underlying stock price. For all charts above, you need to include the calculation details in Excel as the basis to create those charts. 4. Write a brief report in a Word file and briefly describe the following items: • • What is your estimation of the future price of the underlying stock on expiration date of those options selected? Just give a guess with some brief reasoning according to your instincts. No analysis needs to be done for this estimation. Based on your estimation of the underlying stock’s future price, use the charts created, draw a conclusion which option you would like to long or short. 5. Submit both Excel file (with your detailed modeling) and Word file (with your report) through Canvas by deadline.