Consider the following information Symbol : BMO.TO Option Type : Call Exercise Price : $95 Expiration Date
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Question:
Consider the following information
Symbol: BMO.TO
Option Type: Call
Exercise Price: $95
Expiration Date: July 14, 2023
Bid: $0.15
Ask: $0.20
Assume the option matures at the expiry date and is a) in the money with a market price 10% above the exercise price, and b) out of the money with a market price 20% below the exercise price. What is the consequence of your initial recommendation? What is the effect for the entity writing the option? What lessons do you draw?
NOTE: Your answer needs to demonstrate analysis, critical thinking and theory.
Related Book For
Investments
ISBN: 9781259271939
9th Canadian Edition
Authors: Zvi Bodie, Alex Kane, Alan Marcus, Lorne Switzer, Maureen Stapleton, Dana Boyko, Christine Panasian
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