Posted: April 14th, 2022

FIN405-Financial Derivatives

Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
المملكة العربية السعودية
وزارة التعليم
الجامعة السعودية الإلكترونية

College of Administrative and Financial Sciences
Assignment-2
FIN-405-Financial Derivatives
Due Date: 17/4/2022@ 23:59

Course Name: Financial Derivatives Student’s Name:
Course Code: FIN-405 Student’s ID Number:
Semester: Second CRN:
Academic Year:2021-22-2nd

For Instructor’s Use only
Instructor’s Name:
Students’ Grade:
Marks Obtained/Out of 10 Level of Marks: High/Middle/Low

General Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
• All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).
• Submissions without this cover page will NOT be accepted.

Assignment 2
Submission Date by students: 17/04/2022-11:59 PM
Place of Submission: Students Grade Centre via blackboard.
Marks: 10 Marks
Assignment Purposes/Learning Outcomes:
CLO-2: Describe trading strategy which incorporates the use of call and put options

CLO-4. Calculate option maximum gain, maximum loss, and breakeven on various options positions
Assignment Question(s): (Marks 10)
Q1.Explain each of the following concepts as they relate to call options. (3 Marks)
a. Delta ( 1 Mark)
b. Gamma ( 1 Mark)
c. Rho ( 1 Mark)

Q2.What are the differences among scalpers, day traders, and position traders? (3 Marks)

Q3. Assume the possible stock prices of Hull Inc. are $150, $155, $160, $165, $170, $175, and $180. The price(premium) is $5 for October165 put option of Hull Inc.
Suppose you buy one October 165 put option contract(Np=100) of Hull Inc. and hold it until the options expire.
a) Determine the profit and loss at respective stock prices of Hull Inc. (2 Marks)
b) Determine the breakeven stock price at expiration. (1 Mark)
c) What are the maximum possible profit and loss on this transaction. (1

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Ministry of Education of the Kingdom of Saudi Arabia

Saudi University of Electronics

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Administrative and Financial Sciences College

Assignment-2

Financial Derivatives (FIN-405)

The deadline is April 17, 2022, at 23:59 p.m.

Financial Derivatives is the course name.

Name of the student:

FIN-405 is the course code.

Student Identification Number:

Second semester CRN:

2021-22-2nd Academic Year

Only for the instructor’s use.

Instructor’s Name:

Students’ Grade:

Marks Obtained/Out of 10 Level of Marks: High/Middle/Low

General Instructions – PLEASE READ THEM CAREFULLY

• The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.

• Assignments submitted through email will not be accepted.

• Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.

• Students must mention question number clearly in their answer.

• Late submission will NOT be accepted
Mark)

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