Question

The investment management department of your
company has asked you to construct a speculative
trading strategy using options. You have been
asked to invest £100,000 in options trading strategy
for a single FTSE 100 or FTSE 250 non bank,
non-insurance company's shares for the 35 working
day period between Monday 9th March 2020 and
28th April 2020 (inclusive)
a) For the company whose shares are to be the
underlying for your options, set up an options based
trading strategy given your view of:
the company
- current market sentiment regarding the segment in
which it operates
- likely market movements over the period.
You must support your analysis using real market
data (suitably evidenced) as well as suitable
academic literature covering analysis methods such
as, for instance, economic, fundamental, technical
etc
You must include screen shot evidence of the
source of your options pricing in an appropriately
referenced appendix.
b) What is the annualised return that you are
targeting based on your approach? Assess the risk
that your strategy will not produce the returns you
have anticipated. You must also assess the risks
that the use of an options derivative instrument
has introduced to the investment management
department
(500 Words: 10 Marks)
c) Report on the actual profit and loss of your
strategy over the period and analyse its actual
performance relative to its forecast performance
and analyse why your strategy achieved the results
observed
(500 Words: 15 Marks)​

Answer 1

Answer:

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Explanation:

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