Question

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 an RWJ Corp. call option? b-1. Are the put options in or out of the money? In the money 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? Mar call unanswered Apr call unanswered Oct call unanswered Mar put unanswered Oct put unanswered Apr put unanswered 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