Find the price of AMD shares on the day you do this assignment. Using any online options calculator, fin
Find the price of AMD shares on the day you do this assignment. Using any online options calculator, find the current volatility and risk-free rate applicable for AMD options.
Use https://www.optionsprofitcalculator.com/ or similar to calculate the cost of setting up the following positions.
In each case, explain the rationale for establishing these strategies. Then provide a table showing the relationship between the profit and final stock price.
Note: You can ignore the impact of discounting.
- (i) A bull spread using European call options with strike prices approximately $10 below and $5 below the spot price chosen and a maturity of 3 months (5 marks]
- (ii) A bear spread using European put options with strike prices approximately $10 below and $5 below the spot price chosen and a maturity of 3 months [5marks)
- (iii) A butterfly spread using European call options with strike prices approximately $10 below and above the spot price chosen and two nearest the money calls and a maturity of 3 months [5 marks]
- (iv) A straddle using options with a strike price of approximately $5 below and a 3-month maturity [5 marks]
- (v) A strangle using options with strike prices approximately $10 below and $10 above the spot price chosen and a 3-month maturity
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