course hero 11 - Use the options quote information shown...

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stock is currently selling for $114. Calls Puts Option and NY Close - Expiration -Strike Price - Vol. Last - Vol. Last Macrosoft Feb 110 85 7.60 40 .60 Mar 110 61 8.80 22 1.55 May 110 22 10.25 11 2.85 Aug 110 3 13.05 3 4.70 a. Suppose you buy 10 contracts of the Feb 110 call option. How much will you pay, ignoring commissions Calls Puts Expiration Strike Price Vol. Last Vol. Last Feb 110 85 7.6 40 0.6 Mar 110 61 8.8 22 1.55 May 110 22 10.25 11 2.85 Aug 110 3 13.05 3 4.7 Price of call option= $7.60 per share Number of shares per contract= 100 Number of contracts= 10 Amount paid for 10 contracts= $7,600 =10 x 100 x $7.6 Answer: $7,600 b. In part (a), suppose that Macrosoft stock is selling for $1.40 per share on the expiration date. How much is your options investment worth? What if the terminal stock price is $125?
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course hero 11 - Use the options quote information shown...

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