What are the intrinsic values and time premiums of the following call options if the price...
What are the intrinsic values and time premiums of the following call options if the price of the underlying stock is $35? What are the profits and losses to the buyers and the writers if the stock sells for $31 at the options' expiration?
|
Strike Price |
Price of the Option |
|
|
$30 |
$7.50 |
|
|
$35 |
$3.00 |
Homework Answers
a.
Intrinsic Value of Call Option = Max(0, (Stock Price - Strike Price))
Intrinsic Value = (35 - 30)
Intrinsic value = $5
Time Value = Premium - Intrinsic Value
Time Value = 7.50 - 5
Time Value = $2.50
b.
Intrinsic Value = (35 - 35)
Intrinsic Value = 0
Time Value = 3 - 0
Time Value = $0
Add Answer to:
What are the intrinsic values and time premiums of the following
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6. The following table shows the premiums of European call and put options having the same underlying stock, the same time to expiration but different strike prices: StrikeCall Premium Put Premium $20 $23 $25 $3.59 $2.45 $1.89 $2.64 $4.36 $5.70 You use the above call and put options to construct an asymmetric butterfly spread with the following characteristics (i) The maximum payoff of 6 is attained when the stock price at expiration is 23 (ii) The payoff is strictly positive...
#9. Please help me solve for: "The profit (loss) experienced on
option X" for options A-E. Thanks!
Options profits and losses for each of the 100-share options shown in the following table, use the underlying stock price at expiration and other information to determine the amount of profit or loss an investor would have had, ignoring brokerage fees Option Underlying stock price per share at expiration $51 Type of option Call Call Put Put Call Cost of option $190 $335...
3. (10 pts) For each k e [0, 1,2,..., 301 the symbol S(k) denotes the price of the stock at time k. A European call option with strike 90 and expiration n- 30 costs 15. A European put option with strike 100 and expiration 30 costs 11. Both options have the same stock as their underlying security. What is the price of the security whose payoff structure is 7S (30) 630, if S(30) 100, S(30)-30, if 90 S(30) S 100,...
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