VIETNAM NATIONAL UNIVERSITY - HO CHI MINH CITY
INTERNATIONAL UNIVERSITY
SCHOOL OF ECONOMICS, FINANCE AND ACCOUNTING
------------oOo------------
DERIVATIVES AND RISK MANAGEMENT
Thursday Class – Period 789
GROUP ASSIGNMENT
Lecturer: Dr. Vo Xuan Hong
GROUP 14
Name Student ID
1. Dương Hoàng Nghĩa BAFNIU21506
2. Phạm Minh Dũng BAFNIU21422
3. Nguyễn Đức Minh BAFNIU18294
Ho Chi Minh City, Vietnam
05th of January, 2025
Table of Contents
I. INTRODUCTION: ................................................................................. 1
II. INDUSTRY AND COMPANY OVERVIEW: ................................... 1
1. Apple Inc. (AAPL) ...................................................................................................1
2. Tesla, Inc. (TLSA) ...................................................................................................2
3. Meta Platforms, Inc. (META) ..................................................................................3
III. PORTFOLIO CONSTRUCTION: .................................................... 5
1. AAPL .......................................................................................................................5
2. TSLA ........................................................................................................................7
3. META ......................................................................................................................9
IV. PORTFOLIO EVALUATION: ........................................................ 10
V. CONCLUSION: ................................................................................... 10
VI. REFERENCES: .................................................................................. 11
I. INTRODUCTION:
Nasdaq is a global electronic marketplace for buying and selling securities. The
exchange operates 29 markets enabling the trading of stocks, derivatives, fixed income,
and commodities in the U.S., Canada, Scandinavia, and the Baltics.
Nasdaq's headquarters is in New York, its name was originally an acronym for
the National Association of Securities Dealers Automated Quotations. It started as a
subsidiary of the National Association of Securities Dealers (NASD) and officially
opened for business on February 8th, 1971. It was the world's first automated stock exchange.
In 2015, the company changed its name to Nasdaq Inc. Since 2006, the Nasdaq
has consisted of three tiers: the Nasdaq Global Select Market, the Nasdaq Global
Market, and the Nasdaq Capital Market.
Its trading technology is used by 100 exchanges in 50 countries. There are more
than 5,000 companies that are listed and traded on the exchange on a daily basis. Many
of these companies are major technology companies, such as Apple (AAPL) and
Microsoft (MSFT).
We chose to conduct our investment on the New York Stock Exchange due to its
strong reputation. However, it is important to acknowledge that all investments carry
potential risks, so precautionary measures are essential. To mitigate these risks, our team
employed strategies commonly used in derivatives markets to hedge our portfolio. The
investment period spanned from November 18th, 2024, to December 13th, 2024.. This
report also demonstrates our strategy and provides an explanation for our decision-
making process.
II. INDUSTRY AND COMPANY OVERVIEW:
1. Apple Inc. (AAPL)
The technology evolution during industry 4.0 era is significantly impacting on
consumer behaviour and expectation. Starting from the appearance of the "First
touchscreen phone", along with upgrades in advanced software and applications through
each stage, it has contributed to stimulating the consumer behavior of customers
purchasing such devices. that electron. This is also the motivation for large technology
corporations in the world such as Apple, Samsung, Microsoft, Sony,... to continuously
compete with each other, developing new products for sale in the market, in order to
receive higher revenue than the previous year. Looking specifically at the topic of
"Operating Systems", iOS is more favourable than Android, so that in 2023, Apple came
in as the world's third-largest technology firm with the sales of $385.1 billion, based on
the report published on the Forbes.
1
AAPLl Gross Profit Margin Chart 2024 (Source: Finance Charts, 2024)
In the third quarter of 2024, Apple (AAPL)’s quarterly revenue of $85.8 billion,
up 5% year over year. Quarterly earnings per share came in at $1.40, up 11% year over
year. The company’s cash flow from operating activities reached nearly 29 billion USD,
helping them to pay more than 32 billion USD in dividends to shareholders. In
particular, iPhone sales reached 46.22 billion USD, thanks to the impressive iPhone 16.
AAPLl Stock Sprice Chart 2024 (Source: Finance Charts, 2024)
2. Tesla, Inc. (TLSA)
In the context of a global shift towards environmental protection and sustainable
development, technology and manufacturing companies are constantly innovating to
adapt to this trend. Tesla, Inc. (TSLA) is one of the leading companies driving this
movement through environmentally friendly products. By producing electric vehicles,
Tesla not only reduces greenhouse gas emissions but also creates efficient, convenient,
2
and market-oriented vehicle models. Additionally, the company has developed
renewable energy solutions such as solar panels, solar roofs, and advanced energy
storage systems like Powerwall and Megapack. These products not only help individuals
and businesses reduce their reliance on fossil fuels but also contribute to building a
sustainable global energy system. Tesla has demonstrated that technological innovation
can go hand in hand with environmental responsibility, helping to create a greener future
for humanity.
Tesla, Inc. (TSLA) has demonstrated impressive growth recently, making it an
attractive stock for many investors:
TLSA Stock Sprice Chart 2024
In Q3/2024, Tesla achieved revenue of $25.18 billion, an 8% increase compared
to the same period last year, with net profit reaching $2.17 billion, surpassing analysts'
expectations.
Notably, Tesla's stock has risen nearly 70% since the U.S. election, pushing its
market capitalization to $1.33 trillion. CEO Elon Musk forecasts Tesla's electric vehicle
sales to grow by 20% to 30% in the coming year, signaling a positive outlook for the
company. These figures highlight Tesla's strong position for continued growth, making
TSLA a compelling choice for investors interested in the electric vehicle and renewable
energy sectors.
3. Meta Platforms, Inc. (META)
The social technology industry has experienced significant transformation,
characterized by intense competition and rapid innovation. Major players have expanded
beyond traditional social networking to embrace emerging technologies, with Meta
Platforms, Pinterest, Twitter (X Corp), and Google (YouTube) dominating the
landscape with market shares of 61.17 percent, 9.58 percent, 9.08 percent, and 6.22
percent respectively (GlobalStats, 2024). The industry maintains robust valuation
metrics, with P/E ratios ranging from 25.01-31.62, P/B ratios of 5.90-41.05, and an
3
average P/S ratio of 7.30, while current ratios average between 2.5-3.0, indicating strong
liquidity positions.
Meta Platforms stands out with remarkable financial performance, achieving an
ROA of 22.85 percent by end-2024, up from a 20.17 percent twelve-month average
(Finance Charts, 2024). Meta’s ROE grew from 28.19 percent to 35.60 percent year-
over-year (Macro Trends, 2024), with operating margins around 30-35 percent. The
company’s growth is driven by investments in Reality Labs, AI infrastructure
advancement, and strong user engagement across platforms. Meta’s competitive
advantages include network effects across its platforms, sophisticated AI capabilities,
and strong free cash flow generation. These factors, combined with its market leadership
and high trading volume, make Meta attractive for derivatives analysis, offering
opportunities through regular earnings announcements, multiple revenue streams, and
international expansion potential.
META Return on Assets Chart 2024 (Source: Finance Charts, 2024)
META Return on Equity Chart 2024 (Source: Macro Trends, 2024)
4
III. PORTFOLIO CONSTRUCTION:
1. AAPL
AAPL Option Chain Table
Price on 18/11/2024
5
Price on 13/12/2024
On 18th of November, the AAPL’s close price was $228,02. With the expectation
that AAPL’s stock price would increase by 13th of December , we decided to exercise
by following the “Covered Call Strategy”. We purchased 100 shares at $228,02 and sold
1 AAPL $260 Call option expiring on 13th of December at the price of $0,03.
18/11 13/12
Transaction ST < X (248.13 < 260)
-> Do not Exercise
Long 1 AAPL Stock
- 228.02 248.13
at $228,02
Short 1 AAPL Call $260
+ 0.03 0
at $0.03
-227.99 248.13
Net Cashflow
-227.99 x 1 x 100 = -22,799 248.13 x 1 x 100 = 24,813
Total profit $24,813 - $22,799= $2,014
On December 13th, AAPL's close price was at $248.13, which is lower than the
strike price of $260. Therefore, we did not exercise anything more. After calculating for
the initial cost of the shares and saving for the call option, this strategy generated a profit
of $2,014.
6
2. TSLA
TSLA Option Chain Table
Price on 18/11/2024
7
Price on 20/12/2024
On November 18th, Tesla's stock price stood at $338.74. Anticipating a moderate
increase in the stock price by December 20th, we implemented a Covered Call strategy.
We bought 100 shares of TSLA at $338.74 each and simultaneously sold one TSLA
$345 Call option with a December 20th expiration date for $14.45.
18/11 20/12
Transaction
ST > X (421.06 > 345)
-> Exercise
Long 1 TSLA Stock at
-338.74 421.06
$338.74
Short 1 TSLA Call $345 -(ST – X) = - (421.06 – 345)
+14.45
Call at $14.45 = -76.06
-324.29 345
Net Cashflow
-324.29 x 1 x 100 = -32,429 345 x 1 x 100 = 34,500
Profit -$32,429 + $34,500 = $2,071
On December 20, Tesla's stock price closed at $421.06, surpassing the $345 strike
price. Consequently, the call option was exercised the call option to buy 100 share at
$345 (strike price), and we sold our 100 shares at the spot rate of $421.06. Adding the
$14.45 premium earned from selling the call option and minus the price and premium
and loss from the short option, the total revenue amounted to $2,071.
8
3. META
Historical Quotes of META’s Stock from November 15, 2024 to December 16, 2024
(Source: NASDAQ)
On November 18th, 2024, we initiated a long straddle strategy on META stock
when it was trading at $571.22. The Protective Put strategy was used in this deal with
the $570 strike price and we sold one META $570 Put option with a December 20th
expiration date for $28.4.
By expiration on December 13th, 2024, META’s stock price had risen to $620.35,
representing an increase of $49.13 (8.60%), compared to the strike price. The strategy
proved highly successful as the stock moved significantly above the upper break-even
point. The total revenue amounted to $2,073.
18/11 13/12
Transaction ST > X (620.35 > 570)
-> Do not Exercise
Long 1 META Stock
-571.22 620.35
at $571.22
Long 1 META 570 Put
-28.4 0
at $28.4
-599.62 620.35
Net Cashflow
-599.62 x 1 x 100 = -59,962 620.35 x 1 x 100 = 62,035
Profit $62,035 - $59,962 = $2,073
9
IV. PORTFOLIO EVALUATION:
Stock Price Stock Price Profit/Loss Profit/Loss
Stock
On 18/11 On 13/12 from Stock from Option Strategies
AAPL $228.02 $248.13 ($248.13 - $228.02) x 100 = $2,011 $24,813 - $22,799 = $2,014
TSLA $338.74 $421.06 ($421.06 - $338.74) x 100 = $8,232 $34,500 - $32,429 = $2,071
META $571.22 $620.35 ($620.35 - $571.22) x 100 = $4,913 $62,035 - $59,962 = $2,073
TOTAL $15,156 $6,158
V. CONCLUSION:
Overall, the three stocks have fluctuated sharply through the past month. The
option investment strategy in three stocks have equivalent profit around $2,000,
respectively. TSLA's stock price had an amazing rise, 24.3%, and the return is really
impressive ($2,071). AAPL and META's stock price has been more stable than with
around 9% growth rate. When investing in AAPL, we found that the earnings of our
investing was lowest ($2,014) with “Covered call option” strategy. Next up is the return
of TSLA and the highest return is from META by using the “Protective Put option”
strategy ($2,073).
We have determined that by targeting high-growth sectors and implementing an
effective trading investment strategy, we can achieve significant profits. Although, the
return from buy/sell at spot rate bring higher profit ($15,156), we still prefer Option
strategies for the next investment plan because with option we can change the strategies
and bring the different profit and cut down the risk when the stock may fluctuate in a
wrong way.
10
VI. REFERENCES:
1. AAPL. (n.d.). Nasdaq. [Link]
2. Hayes, A. (2024, March 20). What Nasdaq is, history, and financial performance.
Investopedia. [Link]
3. Apple. (2024, October 29). Apple công bố báo cáo kết quả quý ba. Apple
Newsroom (Vietnam). [Link]
third-quarter-results/
4. Apple (AAPL) Option Chain | Nasdaq. (n.d.). Nasdaq.
[Link]
5. TSLA Option Chain. Nasdaq. (n.d.). [Link]
activity/stocks/tsla/option-chain
6. Finance Charts (2024). Meta Platforms (META) Return on Assets (ROA).
Retrieved from [Link] on
December 21, 2024.
7. GlobalStats (2024). Social Media Stats Worldwide. Retrieved from
[Link] on December 20, 2024.
8. Macro Trends (2024). Meta Platforms ROE 2010-2024 | META. Retrieved
from [Link] on
December 21, 2024.
9. Neeti Gupta (2024). Meta's Strategic Investments in AI and the Metaverse.
Retrieved from [Link]
metaverse-neeti-gupta-fjbyc/ on December 21, 2024.
10. TSLA. (n.d.). Nasdaq. [Link]
11. Kessel, A. (2025, January 2). Solar stocks get boost from record Tesla energy
storage deployments. Investopedia. [Link]
get-boost-from-record-tesla-energy-storage-deployments-8768550
11