OPTIONS: Research, Calculation & Analysis - Boeing
Shpaner, Leon - University of California, San Diego - Financial Modeling with Excel
Find the options for The Boeing Company (BA-NYSE) in The Wall Street Journal, Investor’s Business Daily or a comparable financial newspaper. The tasks to be completed for this assigned project are:
- Assume you buy a Boeing call option that is in the money by the smallest amount. You will buy the nearest month possible. If the price of the Boeing common stock goes up by 10% at the expiration of the option, what will be your dollar profit or loss on the option? Assume you close out your option position at its intrinsic value.
- Assume you buy a Boeing put option that is in the money by the smallest amount. You will buy the nearest month possible. If the price of the Boeing common stock goes down by 5% at the expiration of the option, what will be your dollar profit or loss on the option? Assume you close out your option position at its intrinsic value.
The learning goals from this assignment are:
- Demonstrate your competency in constructing an Excel model incorporating Options Pricing formulas.
- Establish connective relationship between course content and real world information.
- Improve your progression of learning via a project-based homework exercise.
Some helpful hints to keep in mind:
- View this as a role playing exercise in which you are pursuing a DIY (Do-It-Yourself) financial strategy.
- Keep in mind the difference between investment and speculation. The world of options is an exciting if not dynamic fusion of both! 😃