1. Assume you own 100 shares of AAPL stock (at
$107.93 per share). Use the February 110 put to develop a protective put
strategy. How will this strategy protect your position in AAPL if the
stock price falls to $90? What if the price rises to $130? Calculate the
net profit generated by the stock and the put at these prices and
assuming they occur at the time of the option's expiration.
2. Focus on the January 120 call. Suppose you
bought this call at the price indicated. How high must AAPL's price rise
at expiration to break even on this option?
3. Create a strangle by buying the February 120
call and the February 110 put.What's the maximum loss for this position
and what range of stock prices will produce it? Where will you break
even? Why would an investor establish a position like this?
4. Now, look at the January 120 put. Provide a
table showing the profit at expiration to a put buyer across a range of
stock prices
