collara collar can be established by holding a, Financial Management

+44 141 628 6080
[email protected]

collara collar can be established by holding a

Collar

A collar can be established by holding a share, along with purchasing a protective put and writing a covered call, where both options at out-of-money..

For Example - ONGC

Underlying stock = Rs. 809

Buy Mar Rs. 800 Put @ Rs.16

Write Mar Rs. 880 Call @ Rs.7.25

Total price for this strategy = 809 + 16 + 7.25 = Rs. 832.25

Maximum Profit: Limited

Call strike - Initial spot price - Put Premium = 880 - 809 - 16 = Rs. 55

Maximum Loss: Limited

Initial spot price - Put strike + Call Premium = 809 - 800 + 7.25 = Rs. 16.25

So an arbitrage opportunity to the tune of Rs. 55 (max) is available if the price target of Rs. 880 or beyond is achieved. On the flip side, we have losses, which are capped at a maximum of Rs 16.25 for price Rs. 800 and below.

View Complete Question

Request for Solution File

Ask an Expert for Answer!!

Financial Management: collara collar can be established by holding a

Reference No:- TGS0157406

Expected delivery within 24 Hours

Have a Question? (oR Write a Review)

Write atleast 100 words!!

Recent Questions Asked Financial Management

Q : a managerial accounting strategy focusing mainly

a managerial accounting strategy focusing mainly on maintaining efficient levels of both components of working capital that is current assets

Q : if a company needs to maintain market position as

if a company needs to maintain market position as a leader in its segment and to increase the same in future the company is carrying out few

Q : simple arbitragethe easiest arbitrage

simple arbitragethe easiest arbitrage opportunities in the option market exist when options violate simple pricing bounds no option for example

Q : protected puta protected put would involve a long

protected puta protected put would involve a long put and a long stockfor example - ongcunderlying stock rs 809buy mar rs 900 put rs688 total

Q : collara collar can be established by holding a

collara collar can be established by holding a share along with purchasing a protective put and writing a covered call where both options at

Q : call-put parityp s c e 11i n

call-put parityp s c e 11i n where p the market price of the put s the market price of the stock c

Q : a futures contract is a contract to purchase and

a futures contract is a contract to purchase and sell a particular asset at a fixed price in a future time period there are two parties for every

Q : valuationthe process of finding out the current

valuationthe process of finding out the current value of an asset or company is known as valuation there are various techniques that can be

Q : debenturea kind of debt instrument that is not

debenturea kind of debt instrument that is not secured by physical any asset or collateral is known as debenture debentures are backed by the

1925002

Questions
Asked

3,689

Active Tutors

1438680

Questions
Answered

Start Excelling in your courses, Ask a tutor for help and get answers for your problems !!

ask Question

Asked Questions

Discuss patient with athsma about use of bronchodilators

You're instructing a patient with athsma about the use of bronchodilators. You should teach the patient which one?

Discuss new forms of advertising changing opdps work

How have social media and other new forms of advertising changing OPDP's work?

Observing and reporting a correctional clients behavior

Observing and reporting a correctional client's behavior is extremely important, to ensure they receive the right mental health care.

Discussion about improve patient satisfaction scores

You are trying to improve patient satisfaction scores in your hospital's emergency department. You decide to poll 40 patients a day for three weeks.

Problem concerning about the risk for stroke

Sam is concerned about his risk for his stroke since his dad died of stroke at age 57 based on the following information why would you recommend

Patient presented with acute-onset abdominal pain

You are on your 5th straight duty in the Urgent Care and you are seeing a 18 yo may who presented with acute-onset abdominal pain for 2 days.

Discuss - male with a history of moderate persistent asthma

A nurse is caring for an 8-year-old male with a history of moderate persistent asthma. He is accompanied by his mom and dad who reported