1. What should a portfolio manager consider before embarking on a put overwriting program during a bear market?2. Refer to Table 17-1. You are considering improving on the market by writing covered calls with an April expiration against shares of Smith Electronics that you own. Is there any relative advantage of the APR 70 call over the APR 75 call?3. Why is writing an in-the-money put riskier than writing an out-of-the money put?4. Someone’s primary portfolio objective is capital appreciation. Would it ever make sense for this person to write covered calls?5. How do index options simplify operational problems with option overwriting? SAMPLE STOCK OPTIONS LISTING Stock & Striking New York Close Price Calls Puts Smith Electronics 60 JAN FEB APR JAN FEB APR 6.38 8.25 9 0.06 0.75 0.88 66.38 65 2.50 4.88 6.75 0.69 2.25 3.50 66.38 70 0.43 2.25 2.75 3.63 5 6 66.38 75 0.06 1.13 2.50 8.38 9 9.75 Western Oil 50 17.25 17.75 18.13 0.06 0.88 1.38 66.75 55 12 14.75 15.50 0.13 1.75 2.50 66.75 60 7.50 11.25 13 0.63 3.38 4.50 66.75 65 4 8.38 10 2.38 6 6.75 66.75 70 2 5.75 7.75 5 8.25 9 66.75 75 0.69 4.13 5.75 8.88 10 11 66.75 80 0.38 3 4.50 14 14.88 16 Nile.com 90 26 26.38 27 0.06 0.13 0.50 116 95 22.25 24.13 25 0.06 0.50 0.75 116 100 18 19.38 21 0.06 0.75 1.13 116 105 12.50 14.75 16 0.06 0.88 2 116 110 8.13 10 13 0.38 2.63 4 116 115 3.50 8 10 1.63 4.25 6 116 120 1.38 6 7.25 5 7.25 8.50 116 125 0.50 4.63 5.50 9.13 10 11.13

1. What should a portfolio manager consider before embarking on a put overwriting program during a bear market? 2. Refer to Table 17-1. You are considering improving on the market by writing covered...

1. What should a portfolio manager consider before embarking on a put overwriting program during a bear market?

2. Refer to Table 17-1. You are considering improving on the market by writing covered calls with an April expiration against shares of Smith Electronics that you own. Is there any relative advantage of the APR 70 call over the APR 75 call?

3. Why is writing an in-the-money put riskier than writing an out-of-the money put?

4. Someone’s primary portfolio objective is capital appreciation. Would it ever make sense for this person to write covered calls?

5. How do index options simplify operational problems with option overwriting?

SAMPLE STOCK OPTIONS LISTING
Stock &	Striking
New York Close	Price		Calls			Puts
Smith Electronics	60	JAN	FEB	APR	JAN	FEB	APR
6.38	8.25	9	0.06	0.75	0.88
66.38	65	2.50	4.88	6.75	0.69	2.25	3.50
66.38	70	0.43	2.25	2.75	3.63	5	6
66.38	75	0.06	1.13	2.50	8.38	9	9.75
Western Oil	50	17.25	17.75	18.13	0.06	0.88	1.38
66.75	55	12	14.75	15.50	0.13	1.75	2.50
66.75	60	7.50	11.25	13	0.63	3.38	4.50
66.75	65	4	8.38	10	2.38	6	6.75
66.75	70	2	5.75	7.75	5	8.25	9
66.75	75	0.69	4.13	5.75	8.88	10	11
66.75	80	0.38	3	4.50	14	14.88	16
Nile.com	90	26	26.38	27	0.06	0.13	0.50
116	95	22.25	24.13	25	0.06	0.50	0.75
116	100	18	19.38	21	0.06	0.75	1.13
116	105	12.50	14.75	16	0.06	0.88	2
116	110	8.13	10	13	0.38	2.63	4
116	115	3.50	8	10	1.63	4.25	6
116	120	1.38	6	7.25	5	7.25	8.50
116	125	0.50	4.63	5.50	9.13	10	11.13

May 26, 2022

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1. What should a portfolio manager consider before embarking on a put overwriting program during a bear market? 2. Refer to Table 17-1. You are considering improving on the market by writing covered...

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