Question
In: Finance
Problem 24-2 Understanding Option Quotes [LO1] Use the option quote information shown here to answer the...
Problem 24-2 Understanding Option Quotes [LO1]
|
Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $68. |
| Calls | Puts | ||||||||||||||||
| Strike | |||||||||||||||||
| Option | Expiration | Price | Vol. | Last | Vol. | Last | |||||||||||
| RWJ | Mar | 63 | 238 | 4.00 | 168 | 4.10 | |||||||||||
| Apr | 63 | 178 | 9.85 | 135 | 8.85 | ||||||||||||
| Jul | 63 | 147 | 10.70 | 51 | 12.05 | ||||||||||||
| Oct | 63 | 68 | 11.60 | 19 | 11.25 | ||||||||||||
| a-1. | Are the call options in or out of the money? |
|
| a-2. | What is the intrinsic value of an RWJ Corp. call option? |
| b-1. | Are the put options in or out of the money? |
|
| b-2. | What is the intrinsic value of an RWJ Corp. put option? |
| c-1. | Two of the options are clearly mispriced. Which ones? |
|
| 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.) |
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Problem 24-3 Calculating Payoffs [LO1] Use the option quote information shown here to answer the questions...
Problem 24-3 Calculating Payoffs [LO1]
Use the option quote information shown here to answer the
questions that follow. The stock is currently selling for $41.
Calls
Puts
Strike
Option
Expiration
Price
Vol.
Last
Vol.
Last
Macrosoft
Feb
43
99
1.63
54
2.63
Mar
43
75
1.87
36
3.04
May
43
36
2.15
25
3.46
Aug
43
17
2.36
17
3.50
a.
Suppose you buy 24 contracts of the February 43 call option. How
much will you pay, ignoring commissions?
...
Use the option quote information shown here to answer the questions that follow. The stock is...
Use the option quote information shown here to answer the
questions that follow. The stock is currently selling for $34.
Calls
Puts
Strike
Option
Expiration
Price
Vol.
Last
Vol.
Last
Macrosoft
Feb
36
92
.93
47
1.93
Mar
36
68
1.17
29
2.34
May
36
29
1.45
18
2.76
Aug
36
10
1.66
10
2.80
a.
Suppose you buy 17 contracts of the February 36 call option. How
much will you pay, ignoring commissions?
Cost
$
...
Use the option quote information shown here to answer the questions that follow. The stock is...
Use the option quote information shown here to answer the
questions that follow. The stock is currently selling for $83.
Strike
Calls
Option
Expiration
Price
Vol.
Last
RWJ
Mar
80
230
1.80
Apr
82
170
3.50
Jul
84
139
4.45
Which options are in-the-money options? What are their
intrinsic values?
Which options are out-of-money options? What are their
intrinsic values?
Which option is mispriced?
Use the option quote information shown here to answer the questions that follow. The stock is...
Use the option quote information shown here to answer the
questions that follow. The stock is currently selling for $28.
Calls
Puts
Option and
NY Close
Expiration
Strike
Price
Vol.
Last
Vol.
Last
Macrosoft
Feb
30
86
0.33
41
1.33
Mar
30
62
0.57
23
1.74
May
30
23
0.85
12
2.16
Aug
30
4
1.06
4
2.20
a.
Suppose you buy 11 contracts of the February 30 call option. How
much will you pay, ignoring commissions? (Do...
Use the option quote information shown here to answer the questions that follow. The stock is...
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...
Use the option quote information shown here to answer the questions that follow. The stock is...
Use the option quote information shown here to answer the
questions that follow. The stock is currently selling for $45.
Calls
Puts
Strike
Option
Expiration
Price
Vol.
Last
Vol.
Last
Macrosoft
Feb
47
103
2.03
58
3.03
Mar
47
79
2.27
40
3.44
May
47
40
2.55
29
3.86
Aug
47
21
2.76
21
3.90
a.
Suppose you buy 28 contracts of the February 47 call option. How
much will you pay, ignoring commissions?
Suppose you buy 28 contracts...
Use the option quote information shown here to answer the questions that follow. The stock is...
Use the option quote information shown here to answer the
questions that follow. The stock is currently selling for $47.
Calls
Puts
Strike
Option
Expiration
Price
Vol.
Last
Vol.
Last
Macrosoft
Feb
48
105
2.23
60
3.23
Mar
48
81
2.47
42
3.64
May
48
42
2.75
31
4.06
Aug
48
23
2.96
23
4.10
a.
Suppose you buy 30 contracts of the February 48 call option. How
much will you pay, ignoring commissions?
Suppose you buy 30 contracts...
Use the option quote information shown here to answer the questions that follow. The stock is...
Use the option quote information shown here to answer the
questions that follow. The stock is currently selling for $42.
Calls
Puts
Option
and
NY Close
Expiration
Strike
Price
Vol.
Last
Vol.
Last
Macrosoft
Feb
44
100
1.73
55
2.73
Mar
44
76
1.97
37
3.14
May
44
37
2.25
26
3.56
Aug
44
18
2.46
18
3.60
a.
Suppose you buy 25 contracts of the February 44 call option. How
much will you pay, ignoring commissions? (Do...
Use the option quote information shown here to answer the questions that follow. The stock is...
Use the option quote information shown here to answer the
questions that follow. The stock is currently selling for $76.
Calls Puts Strike Option Expiration Price Vol. Last Vol. Last RWJ
Mar 69 246 4.80 176 4.90 Apr 69 186 10.65 143 9.65 Jul 69 155 11.50
59 13.25 Oct 69 76 12.40 27 12.05 a-1. Are the call options in or
out of the money? In the money Out of the money a-2. What is the
intrinsic value of...
Use the option quote information shown here to answer the questions that follow. The stock is...
Use the option quote information shown here to answer the
questions that follow. The stock is currently selling for $44.
Calls
Puts
Strike
Option
Expiration
Price
Vol.
Last
Vol.
Last
Macrosoft
Feb
46
102
1.93
57
2.93
Mar
46
78
2.17
39
3.34
May
46
39
2.45
28
3.76
Aug
46
20
2.66
20
3.80
a.
Suppose you buy 27 contracts of the February 46 call option. How
much will you pay, ignoring commissions?
Suppose you buy 27 contracts...
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