Class 14 Answer to Option Valuation Lines & Sample Question.

Class 14 Answer to Option Valuation Lines & Sample Question.

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Unformatted text preview: Class 14 Chapter 9 Review of option value lines. 1) The time-value + intrinsic value line for a PUT Contract is drawn below. Explain why it has the shape it does. 2) The time-value + intrinsic value line for a Call Contract is drawn below. Explain its shape. Why does it have the opposite shape of the put contract? 3) Answer the questions below based on the graph and data on the next page for the listed option contracts. 1. The above graph is for what kind of option? Call 2. How do you determine the option Type? Option value increases with increase in asset value. Consider the appropriate option with a 15 Strike price and answer the following: 3. Determine the underlying asset price for the option with value V 0 18.42 4. Curve with label 7 is for what date? 1/22/2008 5. For this option determine ( V0 – V2) and name this value Time value; (4.00 – 3.42) = .58 6. If possible determine (V 1-V 2 ) for this option. Inconsistent information to determine V 1 7. For this option determine (V 3...
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Class 14 Answer to Option Valuation Lines & Sample Question.

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