Equity

[IFT Team]

Please use this discussion thread to ask and discuss queries related to Equity topic.

[Arif Irfanullah]

 

With less than 3 months left for the exam I hope your studies are coming along well.  If you are following my recommended schedule you should be done with Equity.  Find attached the Equity quiz and solution.   I'm now covering Fixed Income.

 

If you've not done so already I suggest you also start going over Ethics. 

 

Make sure you are doing lots of practice questions.

 

Regards,

 

Arif Irfanullah

[Basir Robinson]

Good Evening,

 

I have not been able to start studying until now due to a family crisis situation I've been dealing with and I'll be honest I am very overwhelmed. Please email me at basirar...@gmail.com Please help me with a guide as far as where I should start and how to follow along. What would you suggest I do since I am starting right now.

[Mitesh Mohnot]

Hi Arif,

I have a doubt in 1 question

"Pierre-Louis Robert just purchased a call option on shares of the Michelin Group. A few days ago he wrote a put option on Michelin shares. The call and put options have the same exercise price, expiration date, and number of shares underlying. Considering both positions, Robert’s exposure to the risk of the stock of the Michelin Group is:

A. long. B. short. C. neutral."

the ans is A but i didn't understand the explanation

Can u please explain the answer

Regards,

Mitesh

[Mitesh Mohnot]

[Rizwan Ali]

Hi Mitesh,

Did you understand that when you purchase a Call option, you are in long position. B/c you have bought a Call option to purchase the shares on exercise date. So option B 'Short' is out.

When you purchase Put Option you are in short position. B/c you have been in contract that you will sell those shares on exercise date (when price is lower then exercise price). Now just think that if you have short by purchasing Put option, then the other side must be long in writing the put option (Think of it from other counterparty side when you were purchasing put option, you were short then other party would be long)

Suppose you write a put option in the market that any one can in the market can sell you the shares on exercise date on exercise price. So you have to buy those shares if buyer of put option exercise it.

Hope it will help.

On Thu, Sep 19, 2013 at 10:16 PM, Mitesh Mohnot <mites...@gmail.com> wrote:

On Monday, June 3, 2013 12:55:57 AM UTC+5:30, IFT Team wrote:

Please use this discussion thread to ask and discuss queries related to Equity topic.

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Regards, Rizwan Qahir Ali
the gain is not worth the pain