Question

Part (1) Option Quotations for the M&B Corporation are listed as follows: .............................................CALL.............PUT Closing.....Strike....EXP...Premium.....Premium 50.3............52.0......Jul........0.250...........2.10 50.3............52.0......Sep......0.400...........2.25 50.3............57.0......Aug......0.500.........7.40 50.3............62.0......Oct.......0.700.........12.6 50.3............67.0......Jun.....1.00............17.8 Closing represents the closing price per share of M&B on a particular trading day. Is the September (Sep) call option in-the-money or out-of-the-money? (answer with the word IN or the word OUT) Is the June (Jun) put option in-the-money or out-of-the-money? (answer with the word IN or the word OUT) Part (2) How much would it cost in premiums to invest in an October (OCT) straddle on M&B? $ Place your answer in dollars and cents without a dollar sign.

You may attempt this question 3 more times for credit. Part (1) Option Quotations for the M&B Corporation are listed as follows: Closing.. Strike....EXP...Premium Premium 50.3.52. 50.3...52.0.Sep...0.4002.25 50.3..57.0Aug.o.507.40 ..0.2.10 50.3...67.0Jun.1.0017.8 Closing represents the closing price per share of M&B on a particular trading day. Is the September (Sep) call option in-the-money or out-of-the-money? s the June (Jun) put option in-the-money or out-of-the-money? Part (2) How much would it cost in premiums to invest in an October (OCT) straddle on M&B? $ Place your answer in dollars and cents without a dollar sign. (answer with the word IN or the word OUT) (answer with the word IN or the word OUT) CHECK ANSWER

Answer 1

1.

OUT( because strike price is more than spot/closing price)

2.

IN( because strike price is more than spot/closing price)

3.

13.3(=0.7+12.6)