*Swamped with your writing assignments? Take the weight off your shoulder!*

Submit your assignment instructions

Assignment 2

Submission Date by students:27/10/2022-11:59 PM

Place of Submission: Students Grade Centre via blackboard.

Marks: 10 Marks

Assignment Question(s):(Marks 10)

Q1.Explain each of the following concepts as they relate to call options.

a. Rho( 1 Mark)

b. Theta( 1 Mark)

c. Vega( 1 Mark)

Q2.Discuss the covered Call strategy and protective Put strategy? And describe their advantages and disadvantages?(3 Marks)

Q3. Consider a stock worth $35 that can go up or down by 15 percent per period. The risk-free rate is 10 percent. The exercise price of European call option is $35. Use one binomial period.

a. Determine the two possible stock prices for the next period. (1 Mark)

b. Determine the intrinsic values/values at expiration of a European call option. (1Mark)

c. Find the theoretical value/Price of the option today.(2 Mark)