Refer to Table 23.2 in the text to answer this question. Suppose you purchase the November 2001 call option on crude oil futures with a strike price of $27.50. How much does your option cost per barrel of oil? What is the total cost? Suppose the price of oil futures is $26.25 per barrel at expiration of the option contract. What is your net profit or loss from this position? What if oil futures prices are $29 per barrel at expiration?

TABLE 23.2

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FUTURES OPTIONS PRICES Tuesday, September 4, 2001 AGRICULTURAL Orange Julce (NYCE) 15,000 lbs.: cents per Ib. STRIKE PRICE 70 75 Nov CALLS-SEFTLE Jan Mar Mar Nov 10.25 12.55 16.15 3.15 0.30 0.65 5.85 8.50 12.20 0.60 0.95 2.30 2.10 5.30 9.05 2.65 2.70 3.10 1.05 1,45 740 5.10 5.50 5.80 050 2.05 5.75 10.20 9.55 9.30 C.35 1.00 4.45 14.95 Est vol 230 Fr 86 calls 5 puts Op int Fri 8.282 calls 11,19 puts 3.80 13.25 PUFS-SETTLE Jan OIL Crude Oll (NYM) 1,000 bbls.; $ per bbl. STAKE CALLS-SETTLE Oct Nov PRICE Dec 1.22 1.71 204 PUTS SETTLE Nov Dec Oct 0.29 0.65 C.96 3.46 0.84 1.18 0.67 1.07 0.97 1.34 1.33 1.54 26:00 2650 0.29 1.41 1.75 2700 3.50 1.14 147 2750 5.40 9.9 2800 0.26 0.71 105 2850 0.16 0.55 088 1.73 1.97 1.26 Esl v 38.212 Fr 6.268 calls 5:21 puts Op int Fri 271 291 calls 345 216 puts 1424 *40 CORRES 1.69 97 British Pound (CME) 62,500 pounds; cents per pound CURRENCY STRIKE PRICE 1420 1430 130 181 1440 0.52 1:26 1450 0.22 0.88 1460 0.08 0.54 1470 0.02 0.36 *** Est vol 1616 Fr 417 calls 273 puls Op . Fri 9.744 calls 9.053 cuts 388R22. 68 CALLS-SETTLE 70 72 Sep 2.22 2.46 Oct Nov www www PUTS-SETTLE.. Sep Del L Copper (CMX) 25,000 lbs.: cents per lb. STRIKE PRICE 64 66 Nov 0.05 0.82 1.38 C14 20 0.42 1.62 1.06 2.24 1.92 METALS TILL CALLS-SETTLE PUTS SETTLE Oct Nov Dac Oct Nov Dec 3.60 4.30 490 0.30 0.75 215 2.95 360 0.85 1.35 1.70 1.06 1.85 255 1.75 2.25 2.65 0.45 1.10 1.70 3.15 3.50 0.15 060 110 485 5.00 5.15 74 006 0.30 070 675 6.65 6.75 Est vn 250 Fr 53 caks 12 puls Op int Fri 5.768 calls 736 puts an For ***