# Option Strategy PPT (***** 7 Slides + Table + Graph *****) - 25947

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## hardik777

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So far, things have gone well with Dr. Washington. Before you wrap up your meetings and he begins investing, you decide to spend a little time sharing information with him about using derivatives to manage risk and enhance returns in his stock portfolio.

You decide the best way to illustrate this is via a call option that he can use on a stock that might have some upside potential. If the stock does not reach the potential, the option minimizes the risk. The stock is AXQ Enterprises—a high-tech firm that did well during the Internet boom but declined when the boom turned into a bust.

If the company’s new portal software is adopted by a large number of consumers over the next few months, you believe the stock can go much higher. The 6-month options are priced at US\$1, the strike price is US\$22, and the current price for AXQ stock is US\$20.

Put together a PowerPoint presentation with a table or graph included that illustrates what advice you would give Dr. Washington on the options if the price of the stock was US\$18, US\$21, US\$24, or US\$28 at the end of 6 months.

Assignment Guidelines:

• Create a PowerPoint presentation for Dr. Washington that includes the
following:
• Slide 1 - Title Slide (Name, course name, and unit number)
• Slide 2 - Your table or graph that contains the stock
option data and the profit/loss depending on the stock prices of US\$18, US\$21,
US\$24, or US\$28 at the end of the 6-month period.
• Slide 3 - Your recommendations on whether or not to
exercise the option based on the four hypothetical stock prices from slide 2.
Explain the reasoning behind your recommendations.
• Slide 4 - Answer the following question:
• What happens if the stock price hits US\$23? US\$23.01?
• Slide 5 - Answer the following question:
• What purpose could adding a technology company into a stock portfolio serve?
presentation format above.

Your submitted assignment (125 points) must include
the following:

A 5-7 slide PowerPoint presentation that includes a title page, your stock option information table or graph, your stock option recommendations, and your answers to the questions listed in the Assignment Guidelines

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