Two different European GE call options are available in the market. Option A has an exercise price of $95, trades at an implied annual volatility of 30% and costs $3.7521 per call. Option B has a strike rate of $85, trades at an implied annual volatility of 20% and costs $7.2748 per call. Both options are based on the same stock which is currently trading at $90 and pays no dividends. The annual risk free rate is 5%. Both option prices are right in line with a Black-Scholes valuation. Use continuous compounding.
a) You believe that all GE call option volatility is going to converge to 25% in the short term. Given this set up a delta neutral strategy using these two options to take advantage of the convergence. Assume you want to trade 1,000 Option A calls.
b) Estimate the profit if the convergence happens immediately and the stock price stays at $90.
c) What is the profit if the stock moves to $89 or to $91? How well is the hedge performing. Get Finance homework help today
Why Choose Us
At Myhomeworkwriters.com, we always aim at 100% customer satisfaction. As such, we never compromise the quality of our essay services. Our essay helpers ensure that they craft each paper carefully to match the requirements in the instruction form.
Professional Academic Writers
With Myhomeworkwriters.com, every student is guaranteed high-quality, professionally written papers. We ensure that we hire individuals with high academic qualifications who can maintain our quality policy. These writers undergo further training to sharpen their writing skills, making them more competent in writing academic papers.
Our company maintains a fair pricing system for all paper writing services to ensure affordability. Our pricing system generates quotations based on the properties of individual papers.
MyHomeworkWriters guarantees all students of swift delivery of papers. We understand that time is an essential factor in the academic world. Therefore, we ensure that we deliver the paper on or before the agreed date to give students ample time for reviewing.
Myhomeworkwriters.com maintains a zero-plagiarism policy. As such, MyHomeworkWriters ensure that they use the students’ instructions to deliver plagiarism-free papers. We are very keen on avoiding any chance of similarities with previous papers.
Customer Support 24/7
Our customer support works around the clock to provide students with assistance or guidance at any time of the day. Students can always communicate with us through our live chat system or our email and receive instant responses. Feel free to contact us via the Chat window or support email: email@example.com.
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
Our writers complete papers strictly according to your instructions and needs, no matter what university, college, or high school you study in.
Our Essay Writing Services
MyHomeworkWriters holds a reputation for being a platform that provides high-quality academic services. All you need to do is provide us with all the necessary requirements and wait for quality results.
At MyHomeworkWriters, we have highly qualified academic gurus who will offer great assistance towards completing your essays. Our essay help service providers are well-versed with all the aspects of developing high-quality and relevant essays.
Admission and Business Papers
With Myhomeworkwriters.com, we will help you secure a position at your desired institution. Our essay writing services include the crafting of admissions papers. We will still help you climb your career ladder by helping you write the official papers that will help you secure a job. We will guide you on how to write an outstanding portfolio or resume.
Editing and Proofreading
Myhomeworkwriters.com has a professional editorial team that will help you organize your paper, paraphrase it, and eliminate any possible mistakes. Also, we will help you check on plagiarism to ensure that your final paper posses quality and originality.
My Homework Writers harbors professional academic writers from diverse academic disciplines. As such, we can develop essay help services in all academic areas. The simplicity or complexity of the paper does not affect the quality of essay writing services.