The current stock price of ABC is $114. You have the following quotes on ABC options:
|
Expiration
|
Exercise
Price
|
Calls
|
Puts
|
|
Feb
|
115
|
8.05
|
1.05
|
|
Mar
|
115
|
9.30
|
1.95
|
|
May
|
115
|
11.65
|
3.35
|
|
Aug
|
115
|
13.70
|
5.15
|
a) Are the call options in the money?
b) What is the exercise value of an ABC call option?
c) Suppose you buy 10 contracts of the February 115 call option. How much will you pay, ignoring commissions?
d) In part (c) suppose that ABC stock is selling for $130 per share on the expiration date. Ignoring the premium paid, how much is your option investment worth? What if the stock price is $110?
e) Suppose you buy 10 contracts of the August 115 put option. What is the absolute maximum profit/gain you could achieve?