Question: Understanding Option Quotes Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $94. a. Are

Understanding Option Quotes Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $94.

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 Option and Puts Strike Expiration Vol. Vol. Last NY Close Price

Calls Option and Puts Strike Expiration Vol. Vol. Last NY Close Price Last RWJ 2.80 Mar 230 170 160 0.80 1.40 90 Apr 127 90 90 3.90 3.65 139 43 Jul 8.05 10.20 60 11 Oct 90

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