A call option's time premium diminishes:
The answer is: as expiration date approaches or decrease in time remaining until expiration
A call option has a premium of 2.50, the strike price is 23, and the underlying stock price is 22. What is the option's time value?
In 100 words or more: Define a call option's exercise value. Why is the actual market price of a call option usually above its exercise value?
QUESTION 4 6 points Save Answer Consider three at-the-money (ATM) European call options (i.e., S = X for each of them) written on the same underlying asset, with the following common parameter values: r=0% p.a. and 0 = 100% p.a. However, one of the options matures in T = 12 months, another in T = 24 months, and the last one matures in 36 months. Based on the premiums of these three call options, what do you conclude regarding the...
For all call and put options, answer questions based on per share price, per share premium, and etc. Please be aware that the first question is asking from the buyer of the call option's point of view and the second question is asking from the seller of the put option's point of view. Answering the questions from the wrong perspective will not be granted most of credits. 2. The market price for Alibaba Group Holding Limited. (Ticker: BABA) was $198.74...
What does an equity option's delta reflect? Multiple Choice The volatility of the underlying stock price The dividends paid to the underlying stockholders The number of shares needed to replicate one call option The time to expiration
Consider a June Euro currency call with K = 1.025 and a call premium of 0.045. Suppose the current spot exchange rate of 1 Euro (Euro-USD) is 1.125 (1€ = $1.125). The breakeven Euro exchange rate is ________________. With the current € exchange rate, the intrinsic value of this Euro call is ______________, the time value is _____________, and the profit of the currency call is ________________.
QUESTION 10 A put option expires $6 in the money, meaning that the option's payoff is $6. What is the payoff at expiration of the "corresponding" call option; that is, a call option with the exact same parameter values as the put option?
What is another name for an option's strike price? A. Time value B. Market price C. Exercise price D. Intrinsic value E. Opening price
• Long cury strangle Call option premium - 50.03., Put option premium - $0.02 € Call option strike price 1.25/6, Put option strike price $1.15 € Option contract size - €62,500 Draw graphs of call option, put option, and straddle Mark BE point and Strike prices Mark each premium 1 S105 S 15E $1.20 € $1.25 € $1.30/E Long call option Spot exchange rate Exercise (NY) Holder's net profit per unit Exercise (NY Holder's net profit per unit Net profit...
QUESTION 3 A European call option written on one share of Medident Corp. has the following parameter values: S = $220, X = $200, r = 5% p.a., sigma = 20% p. a., T = 12 months. Find the call option's premium, rounded to 2 decimals (e.g., 3.24). Do NOT include the $ sign in your answer; write only the numerical value. NOTE: Use the continuous time version of the Black-Scholes equation (i.e., do NOT use the book's version).