FIU FIN4486 Homework 1 Chapters 1 & 2

An investor enters into a short oil futures contract when the futures price is $15.5 per barrel. The contract size if 100 barrels of oil. How much does the investor gain or lose if the oil price at the end of the contract equals $14.0?

An investor enters into a long oil futures contract when the futures price is $18.0 per barrel. The contract size if 100 barrels of oil. How much does the investor gain or lose if the oil price at the end of the contract equals $16.75?

Suppose that a September call option with a strike price of $60 costs $14.0. Under what circumstances will the holder of the option earn a profit? Let S equal the price of the underlying.

Suppose that a September put option with a strike price of $60 costs $9.0. Under what circumstances will the holder of the option earn a profit? Let S equal the price of the underlying.

Suppose that a September put option with a strike price of $95 costs $10.0. Under what circumstances will the seller (or writer) of the option earn a profit? Let S equal the price of the underlying.

Suppose you enter into a short position to sell March Gold for $255 per ounce. The contract size is 100 ounces, the initial margin is $2550 and the maintenance margin is $1020. At what price will you receive a margin call?

Suppose that on October 24 you buy 12 March gold futures contracts for $250 per ounce. At 11:00 am on October 25 you buy 10 more contracts for $245.5 ounce. At the close of trading on October 25, gold futures settle for $239.0 ounce. If the contract size is 100 ounces and the initial margin equals 2500, how much do you gain or lose as of the close?

Suppose that on October 24 you Sell 8 March gold futures contracts for $345 per ounce. At 11:00 am on October 25 you buy 5 March contracts for $347.0 ounce. At the close of trading on October 25, gold futures settle for $348.0 ounce. If the contract size is 100 ounces and the initial margin equals 3450, how much do you gain or lose as of the close?