Determining call holder-s profit and holding period return


1) How do companies compare to its first trading day opening and closing prices? If the valuations vary from observed prices, can you briefly forward any possible description?

2) A six-month call option contract on 100 shares of Home Depot common stock with the strike price of $60 can be bought for $600. Supposing that market price of Home Depot stock increases to $75 per share by expiration date of option, determine the call holder's profit? Find out the holding period return?

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3) You come to a decision to act on your hunches about feeder cattle, so you buy four contracts for April delivery at 88.8. You are needed to put down 10%. How much equity/capital did you require to make this transaction?

4) You were right when you bought four contracts for feeder cattle at 88.8, as spot price on cattle rose to 101.2 on delivery date given in your contracts. How much money did you make? What was your return on invested capital?

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Finance Basics: Determining call holder-s profit and holding period return
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