option investing fin 102

Instructions Navigating the Workbook Entering your information Entering data Printing Top Navigating the Workbook You can always move quickly around an Excel workbook by selecting the worksheet tab at the bottom of the screen. Each worksheet in an Excel workbook will have its own tab. Another way to move quickly around an Excel workbook is by using the following keyboard shortcuts: CTRL+PAGE DOWN: Moves you to the next sheet in the workbook. CTRL+PAGE UP: Moves you to the previous sheet in the workbook. Entering your information For each question you will see the following lists and boxes: Student Name: Course Name: Student ID: Course Number: Enter your information in these cells before submitting your work. Top Entering data To enter numbers or text for these questions click the cell you want, type the data and press ENTER or TAB. Press ENTER to move down the column or TAB to move across the row. For cells or columns where you want to enter text select “Format”, “Cells” from Excel’s main menu at the top of your screen. Select the “Number” tab and “Text” from the category list. Printing To print your work select “File”, “Print Preview” from Excel’s main menu at the top of your screen. The print area for each question has been set but be sure to review the look of your print job. If you need to make any changes select “Setup” when you are previewing the document. Copyright © 2008 McGraw-Hill/Irwin Top Case Analysis Use the spreadsheet below to answer these questions. a. Plot the payoff and profit diagrams to a straddle position with an exercise (strike) price of $130. Assume the options are priced as they are in the Excel Application. b. Plot the payoff and profit diagrams to a spread position with exercise (strike) prices of $120 and $130. Assume the options are priced as they are in the Excel Application. Case Analysis Student Name: Course Name: Student ID: Course Number: Use the Excel Applications model below to answer each question. The data for the payoff diagram is created. Use the Data Table Function. For help with the Data Table function go to Office Online Create the Payoff Diagram and post below Stock Prices Beginning Market Price Ending Market Price 116.5 130 Buying Options: Call Options Strike 110 120 130 140 Price 22.80 16.80 13.60 10.30 Payoff 20.00 10.00 0.00 0.00 Profit -2.80 -6.80 -13.60 -10.30 Return % -12.28% -40.48% -100.00% -100.00% Put Options Strike 110 120 130 140 Price 12.60 17.20 23.60 30.50 Payoff 0.00 0.00 0.00 10.00 Profit -12.60 -17.20 -23.60 -20.50 Return % -100.00% -100.00% -100.00% -67.21% Straddle 110 120 130 140 Price 35.40 34.00 37.20 40.80 Payoff 20.00 10.00 0.00 10.00 Profit -15.40 -24.00 -37.20 -30.80 Return % -43.50% -70.59% -100.00% -75.49% 110 120 130 140 Price 22.80 16.80 13.60 10.30 Payoff -20 -10 0 0 Profit 2.80 6.80 13.60 10.30 Return % 12.28% 40.48% 100.00% 100.00% 110 120 130 140 Price 12.60 17.20 23.60 30.50 Payoff 0 0 0 10 Profit 12.60 17.20 23.60 40.50 Return % 100.00% 100.00% 100.00% 132.79% Ending Stock Price 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 210 Selling Options: Call Options Strike Put Options Strike Money Spread Price Payoff Profit Bullish Spread Cell Ref Cell Ref Combined Profit Post your Payoff Diagram here Copyright © 2008 McGraw-Hill/Irwin 0.00 -6.80 13.60 6.80 Ending Stock Price 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 210 X 130 Straddle Profit -37.20 Bullish Spread 6.80