Question: Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $82. a. Are the call options

Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $82.

CALLS PUTS OPTION AND NY CLOSE STRIKE PRICE VOL. LAST VOL. LAST EXPIRATION RWJ 80 80 230 .80 Mar 1.90 160 6 127 Apr 1.40

a. Are the call options in the money? What is the intrinsic value of an RWJ Corp. call option?
b. Are the put options in the money? What is the intrinsic value of an RWJ Corp. put option?
c. Two of the options are clearly mispriced. Which ones? At a minimum, what should the mispriced options sell for? Explain how you could profit from the mispricing in each case.

CALLS PUTS OPTION AND NY CLOSE STRIKE PRICE VOL. LAST VOL. LAST EXPIRATION RWJ 80 80 230 .80 Mar 1.90 160 6 127 Apr 1.40 170 139 43 80 8.05 3.90 Jul 80 10.20 11 3.65 60 Oct

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