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In: Finance

Option and Strike Price Price of the Option Price of the Stock Calls: LMN, Inc., 60...

Option and Strike Price

Price of the Option

Price of the Stock

Calls: LMN, Inc., 60

           LMN, Inc., 70

$11.00

$1.50

$68

$68

Puts: LMN, Inc., 60

LMN, Inc., 70

$1.00

$4.50

$68

$68

1) Calculate the Intrinsic Value of each call option.

2) Calculate the Time Value of each call option.

3) Calculate the Intrinsic Value of each put option.

4) Calculate the Time Value of each put option.

5) If the stock sells for $72 at the expiration date of the preceding options, what are the profits and losses for the writers and buyers of these options?

Option Type and Strike Price

Buyer: Profit/(Loss)

Writer: Profit/(Loss)

LMN Call at $60

LMN Call at $70

LMN Put at $60

LMN Put at $70

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago
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