Microsoft (MSFT) is currently trading at $232.40. The options chain with expiration on May, 21 (2021) shows
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Question:
Call premium. Strike Put premium
$15.70. 230 $12.60
$10.50 240 $17.50
a.What is the current intrinsic value and time value for these options? What is the moneyness (ITM, ATM or OTM) of each one of these options?
b.If MSFT stock price at the expiration of these options is equal to $236.50, and an investor bought $5,000 with each one of these four options (only long positions), what will be the final equity in each one? Show the calculations using intrinsic and time value to justify your answer.
Related Book For
Investment Analysis and Portfolio Management
ISBN: 978-0538482387
10th Edition
Authors: Frank K. Reilly, Keith C. Brown
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