The current stock price of RWJ is $312.32. You have the following quotes on RWJ options: Expiration
Question:
The current stock price of RWJ is $312.32. You have the following quotes on RWJ options:
Expiration | Exercise Price | Calls | Puts |
Dec | 305 | 27.40 | 8.25 |
Jan | 310 | 18.43 | 14.15 |
Feb | 315 | 19.55 | 20.00 |
May | 320 | 25.55 | 30.40 |
a. Which of the options are in the money?
b. What is the exercise value of a February call option with a strike price of $315?
c. Suppose you buy 10 contracts of the February 315 call option. How much will you pay, ignoring
commissions
d. Suppose you buy 10 contracts of the February 315 call option. If RWJ stock is selling for $310 per
share on the expiration date, what is your profit or loss?
e. Suppose you buy 10 contracts of the February 315 call option. If RWJ stock is selling for $320 per
share on the expiration date, what is your profit of loss?
f. Suppose you buy 10 contracts of the May 320 put option. What is the maximum profit you could
achieve?
Introduction To Corporate Finance
ISBN: 9781118300763
3rd Edition
Authors: Laurence Booth, Sean Cleary