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course hero 15

# course hero 15 - 5 Chpt 22-2 Understanding Option Quotes...

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5) Chpt 22-2 : Understanding Option Quotes: Use the option quote information shown here to answer the questions that follow. The stock is currently selling for \$83. Option & NY close Calls Puts Strike price vol last vol last March 80 230 2.80 160 0.80 April 80 170 6.00 127 1.40 July 80 139 8.05 43 3.90 October 80 60 10.20 11 3.65 a) Are the call options in the money? What is the intrinsic value of an RWJ Corp. call option? A call option is in the money when stock price is greater than the exercise price The strike price is \$80 and the underlying stock price is \$83. The call options are therefore, in the money as stock price( \$83)> exercise price (\$80) Intrinsic value of all call option = Max (Stock Price-Exercise Price, 0) Intrinsic value of a call option = Max (\$83-\$80, 0) = \$3.00 b) Are the Put options in the money? What is the intrinsic value of an RWJ Corp Put option? A put option is in the money when stock price is less than the exercise price The strike price is \$80 and the underlying stock price is \$83. The put options are

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