What is meant by an option that is in-the-money? Graph this for both call and put...
What is meant by an option that is in-the-money? Graph this for both call and put options (identify x and y axis clearly).
Homework Answers
An in-the-money option means that the option is giving profit and can be exercised by the option holder.
In case of call option, an option is in the money when stock price is more than strike price.
In case of put option, an option is in the money when the strike price is more than stock price.
In
the first diagram of long call, as the stock price goes above
strike price , the call option goes in the money and the option is
exercised.
In the second diagram of long put, till the strike price is above stock price, the option is in the money, and it is exercised.
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What is meant by an option that is in-the-money? Graph this for
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What is an in-the-money call option? What is an out-of-money put option? Provide examples
What is an in-the-money call option? What is an out-of-money put option? Provide examples
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5. A call option on Company B common stock is worth $8 with 7 months before...
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Question 7: 1. Both a call option and a put option are currently traded on stock...
Question 7:
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Question 7:
1. Both a call option and a put option are currently traded on stock AXT. Both options have a strike price of $90 and maturity (T) of three months. The call premium (Co) is $2.75, the put premium (Po) is $4.12, and the underlying stock price (So) is $89.50. Assume that you trade one contract that has 100 shares when you calculate profit or loss. What will be your profit (or loss) if you take a long position...
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