Six months ago, you purchased a European call option for $2.5. The option is about to expire.
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Question:
Six months ago, you purchased a European call option for $2.5. The option is about to expire. It has an exercise price of $56 and a premium of $4. The underlying asset is selling for $54.
a) How would you describe this option - inthemoney, atthemoney or out of the money?
b) Whatistheintrinsicvalueofthiscalloption?
c) Whatisthetimevalueofthiscalloption?
d) Whatwouldyouroverallprofitorlossbeifthe option is expired immediately?
Related Book For
Essentials of Business Analytics
ISBN: 978-1285187273
1st edition
Authors: Jeffrey Camm, James Cochran, Michael Fry, Jeffrey Ohlmann, David Anderson, Dennis Sweeney, Thomas Williams
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