Problem 17-1 Understanding Option Quotes

Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $64.

Option and						Calls						Puts
NY Close	Expiration			Strike Price		Vol.			Last			Vol.			Last
RWJ
		Mar		59			234			3.60			164			3.70
		Apr		59			174			9.45			131			8.45
		Jul		59			143			10.30			47			11.45
		Oct		59			64			11.20			15			10.85

a-1. Are the call options in or out of the money?

In

Out

a-2. What is the intrinsic value of an RWJ Corp. call option? (Do not round intermediate calculations.) Intrinsic value $ b-1. Are the put options in or out of the money?

In

Out

b-2. What is the intrinsic value of an RWJ Corp. put option? (Do not round intermediate calculations.) Intrinsic value $ c. Two of the options are clearly mispriced. Which ones? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

Mar call unanswered

Apr call unanswered

Oct call unanswered

Mar put unanswered

Oct put unanswered

Apr put unanswered