Question

Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $69.

  

						Calls						Puts
Option and
NY Close	Expiration			Strike Price		Vol.			Last			Vol.			Last
RWJ
		Mar		64			239			4.10			169			4.20
		Apr		64			179			9.95			136			8.95
		Jul		64			148			10.80			52			12.20
		Oct		64			69			11.70			20			11.35

a-1.	Are the call options in or out of the money?
	In Out

a-2.	What is the intrinsic value of an RWJ Corp. call option? (Do not round intermediate calculations.)

Intrinsic value

$

  

b-1.	Are the put options in or out of the money?
	In Out

b-2.	What is the intrinsic value of an RWJ Corp. put option? (Do not round intermediate calculations.)

Intrinsic value

$

  

c.	Two of the options are clearly mispriced. Which ones? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)
	Mar call Apr call Oct call Mar put Oct put Apr put

+

c-2.	What is the arbitrage profit you could make on each of the mispriced options? (Round your answers to 2 decimal places, e.g., 32.16.)

    

Answer 1