When the exercise price of a call option is higher than the current price of the...
- When the exercise price of a call option is higher than the current price of the stock, the option is said to be:
- At-the-money.
- In-the-money.
- Out-of-the-money.
- Trading at par.
Homework Answers
Option C is correct
Out of the money
As exercise price is greater than current stock price, one cannot exercise the option.
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When the exercise price of a call option is higher than the
current price of the...
When the exercise price of a call option is higher than the current price of the...
When the exercise price of a call option is higher than the current price of the stock, the option is said to be: a. at-the-money. b. in-the-money. c. out-of-the-money. d. trading at par.
The current market price of a share of Disney stock is $30. If a call option...
The current market price of a share of Disney stock is $30. If a call option on this stock has a strike price of $35, the call is out of the money. is in the money. can be exercised profitably. is out of the money and can be exercised profitably. is in the money and can be exercised profitably. The maximum loss for a writer of a put option on a stock is unlimited. equal to the exercise price. equal...
A put option is said to be in –the money if the: A. exercise price is less than the share price B. exercise price is greater than the share price C. exercise price is equal to the share price D. price...
A put option is said to be in –the money if the: A. exercise price is less than the share price B. exercise price is greater than the share price C. exercise price is equal to the share price D. price of the put is higher than the price of the call
A 3 month call option is trading with an exercise price of US$50.The current price of...
A 3 month call option is trading with an exercise price of US$50.The current price of the underlying stock is US$60.The risk free rate is 7% compounded continuously and the variance of the stock price return is 14.4%. Required: 1.What is the intrinsic value of this call option? 2.Based on the Black Scholes model what is the total value of this call option? 3. what accounts for the difference between the total value and the intrinsic value? .
A call option is out of the money when the ____. A. market price of the...
A call option is out of the money when the ____. A. market price of the underlying security exceeds the exercise price B. market price of the underlying security equals the exercise price C. market price of the underlying security is less than the exercise price D. premium on the option is less than the exercise price E. premium on the option is less than the market price of the underlying security
Call option A has an exercise price of $20. Call option B has an exercise price...
Call option A has an exercise price of $20. Call option B has an exercise price of $15. If all other characteristics of these options are identical and they are on the same underlying asset, which option will have a higher price? A. Call option A will have a higher price. B. Call option B will have a higher price. C. Call option A and call option B will have the same price. D. It’s impossible for two options on...
1) A call option is priced at $7 with an exercise price of $100 and an...
1) A call option is priced at $7 with an exercise price of $100 and an underlying stock price of $98. If the stock price at expiry is $102 determine the following: o Option value for a long position o Profit for a long position 2) A put option is priced at $4 with an exercise price of $60 and an underlying price of $62. Determine the following: o Option value for a long position if the stock price at...
A call option has an exercise price of $35 and a stock price of $36.50. If...
A call option has an exercise price of $35 and a stock price of $36.50. If the call option is trading at $2.25, what is the time value embedded in the option? $2.25 $0 $.75 $1.50
The potential gain for a holder of a naked call option on a stock is _________....
The potential gain for a holder of a naked call option on a stock is _________. Multiple Choice equal to the strike price plus the premium Incorrect larger with a higher strike price unlimited larger with a higher stock price A put option on Brocklehurst Corp. has an exercise price of $30. The current stock price of Brocklehurst Corp. is $32. The put option is _________. Multiple Choice at the money in the money Incorrect out of the money Not...
Consider the following call option: The current price of the stock on which the call option...
Consider the following call option: The current price of the stock on which the call option is written is $32.00; The exercise or strike price of the call option is $30.00; The maturity of the call option is .25 years; The (annualized) variance in the returns of the stock is .16; and The risk-free rate of interest is 4 percent. Use the Black-Scholes option pricing model to estimate the value of the call option.
1) A call option is priced at $7 with an exercise price of $100 and an underlying stock price of $98. If the stock price at expiry is $102 determine the following: o Option value for a long position o Profit for a long position 2) A put option is priced at $4 with an exercise price of $60 and an underlying price of $62. Determine the following: o Option value for a long position if the stock price at...
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