Posted: July 8th, 2021

Derivatives and risk management | Financial markets homework help

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. 

  1. (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] 
  2. (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) 
  3. (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] 
  4. (iv) A straddle using options with a strike price of approximately $5 below and a 3-month maturity [5 marks] 
  5. (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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