Puzzle for the Coconut, and
Jack gets to play as well, starting this weekend, and game stops 19th February 2021.
He knows the very basics, and his first response was,
"so, I get to keep the winnings, but would not lose anything"
"correct"
"okay, I will play. Well, technically anything can happen in the market"
Would say full marks right out of the gate :0)
The totality of the pages are below
Multiple Choice:
Choose any one of the below 4 portfolios, explain why, and should your chosen portfolio beat the three you did not choose, you get to keep the winnings
(1) Buy 800 shares of DRD at 12.41 per share for a total of US$ 9,928.00
(2) Buy 22 shares of Tesla at 439.67 per share for a total of US$ 6,672.74
(3) Buy 400 shares of DRD at 12.41 per share and 11 shares of TSLA at 439.67 per share, for a total of US$ 9,800.37
(4) Buy 1,200 shares of DRD at 12.41 per share for a total of US$ 14,892, and
(4-i) short 3 Calls (each representing 100 shares) of TSLA February 19 Call strike-800 at 10.80 per share, collecting 3,240 in premium, and
(4-ii) short 20 Puts (each representing 100 shares) of DRD February 19 Put strike-10 at 0.80 per share, collecting US$ 1,600 in premium
DRD (DRD) https://finance.yahoo.com/quote/DRD?p=DRD&.tsrc=fin-srch
Tesla (TSLA) finance.yahoo.com
Stock https://en.wikipedia.org/wiki/Stock
Stock (also capital stock) of a corporation, is all of the shares into which ownership of the corporation is divided.[1] In American English, the shares are collectively known as "stock".[1] A single share of the stock represents fractional ownership of the corporation in proportion to the total number of shares. This typically entitles the stockholder to that fraction of the company's earnings, proceeds from liquidation of assets (after discharge of all senior claims such as secured and unsecured debt),[2] or voting power, often dividing these up in proportion to the amount of money each stockholder has invested. Not all stock is necessarily equal, as certain classes of stock may be issued for example without voting rights, with enhanced voting rights, or with a certain priority to receive profits or liquidation proceeds before or after other classes of shareholders.
Stock can be bought and sold privately or on stock exchanges, and such transactions are typically heavily regulated by governments to prevent fraud, protect investors, and benefit the larger economy. The stocks are deposited with the depositories in the electronic format also known as Demat account. As new shares are issued by a company, the ownership and rights of existing shareholders are diluted in return for cash to sustain or grow the business. Companies can also buy back stock, which often lets investors recoup the initial investment plus capital gains from subsequent rises in stock price. Stock options, issued by many companies as part of employee compensation, do not represent ownership, but represent the right to buy ownership at a future time at a specified price. This would represent a windfall to the employees if the option is exercised when the market price is higher than the promised price, since if they immediately sold the stock they would keep the difference (minus taxes).
Call Option https://www.investopedia.com/terms/c/calloption.asp
Call options are financial contracts that give the option buyer the right, but not the obligation, to buy a stock, bond, commodity or other asset or instrument at a specified price within a specific time period. The stock, bond, or commodity is called the underlying asset. A call buyer profits when the underlying asset increases in price.
A call option may be contrasted with a put, which gives the holder the right to sell the underlying asset at a specified price on or before expiration.
Put Option https://www.investopedia.com/terms/p/putoption.asp
A put option is a contract giving the owner the right, but not the obligation, to sell–or sell short–a specified amount of an underlying security at a pre-determined price within a specified time frame. This pre-determined price that buyer of the put option can sell at is called the strike price.
Put options are traded on various underlying assets, including stocks, currencies, bonds, commodities, futures, and indexes. A put option can be contrasted with a call option, which gives the holder the right to buy the underlying at a specified price, either on or before the expiration date of the options contract. |
