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You have written a call option on Walmart common stock. The option has an exercise price...

You have written a call option on Walmart common stock. The option has an exercise price of $88, and Walmart’s stock currently trades at $86. The option premium is $1.30 per contract. a. How much of the option premium is due to intrinsic value versus time value? b. What is your net profit if Walmart’s stock price decreases to $84 and stays there until the option expires? c. What is your net profit on the option if Walmart’s stock price increases to $94 at expiration of the option and the option holder exercises the option?

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jeff jeffy answered 2 years ago
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