1.A speculator buys a July corn futures contract at $2.18/bu. and simultaneously writes a July 220 corn futures call option at 8 cents. Calculate the speculator's combined gain or loss if the price of corn rises to 235 and the option is exercised.
2.One hundred shares of a stock are purchased for $45 per share. Simultaneously, a 5 year warrant on the same company is sold short @ $8. The warrant permits the pur¬chase of 100 shares of stock from the company at $55. Over the next five years, a total of $2.50 in dividends is received on each share. What is your profit or loss if, at the end of the warrant's life, the stock price is
a. $40
b. $50
c. $60
3.You are involved in a portfolio insurance strategy, and are interested in replicating a particular put option with a delta of ? 0.4889. You would combine this put with your stock position to effectively form a protective put. If you own 100,000 shares of the under¬lying stock how many shares should you sell short in your short account to leave you with the synthetic protective put?