1. A put on crude oil with a strike price of $35 is priced at $2 per barrel while a call with a strike price of $35 is priced at $3.50. The maximum per barrel loss to the writer of a put is _____ and the maximum per barrel gain to the writer of a call is _____. Show work
a. $33.00, $3.50 b. $33.00, $31.50 c. $35.00, $3.50 d. $37.00, $38.50 e. $2, $3.50
2. You purchase one crude oil July 55 call contract for a premium of $1.20 (per barrel). You hold the option until the expiration date when crude oil sells for $53 per barrel. You will realize a _____ on the investment. (Hint: Assume that each call covers 1,000 barrels) Show work please
a. $1,200 loss
b. $1,200 gain
c. $2,000 gain
d. $2,00, loss
e. $3,200 loss