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Challenge The option margin requirement we’ve used this semester (see the equation sheet) is just one of two formulas that brokers may use to determine how much margin a trader must post to open a short position. Brokers calculate both requirements and then require the trader to post the greater of the two. To see why this matters, consider the following situation that arises with our margin requirement formula. You are in bearish on the volatility, but bullish on the price of McDonald’s stock (ticker: MCD), whose current spot price of MCD is $[S]. Under our option margin requirement, what strike price should you choose such that you would not have to post any margin (beyond the option’s price)? Enter your answer as a number of dollars per share, rounded to the nearest $0.01.

Consider a [K]-strike call that expires in [days] days whose price is currently $[C]. The underlying’s current spot price is $[S] and the risk-free rate is [r0] percent per year, continuously compounded. The underlying does not pay a dividend. Before any time can pass, the risk-free rate falls by 1 percent. If the underlying’s spot price does not react to the fall, what is the new call price immediately after the interest rate fall? (Hint: the risk-free rate only affects the option’s time value.) Enter your answer as a number of dollars, rounded to the nearest $0.01. Assume a year has 252 days.

A trader takes a long position 1 put option contract on NVDA with the following terms: Strike price: $460 Option premium: $12.00 Contract size: 100 shares Shares of NVDA are trading at $455 when the trader opens their position. At expiration, NVDA closes at $430. How much leverage did the trader use with their bet on NVDA ?

Which of the following best describes Merrill Lynch’s relationship with Long-Term Capital Management (LTCM)?

Due to the tremendous price fluctuations in options owing to their embedded leverage, how frequently should traders monitor their option positions?

What does it mean for an option to be out-of-the-money?

Traders with short put positions, all else equal, prefer higher strike prices.

Challenge The option margin requirement we’ve used this semester (see the equation sheet) is just one of two formulas that brokers may use to determine how much margin a trader must post to open a short position. Brokers calculate both requirements and then require the trader to post the greater of the two. To see why this matters, consider the following situation that arises with our margin requirement formula. You are in bearish on the price and volatility of McDonald’s stock (ticker: MCD), whose current spot price of MCD is $[S]. Under our option margin requirement, what strike price should you choose such that you would not have to post any margin (beyond the option’s price)? Enter your answer as a number of dollars per share, rounded to the nearest $0.01.

Traders with long put positions, all else equal, prefer higher strike prices.

According to the NCRP task group that includes AAPM recommendations, the recommended minimum frequency of checking beam profile constancy is and the tolerance is plus or minus %.