2. Option basics Aa Aa The Chicago Board Options Exchange (CBOE) is one of the w

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2. Option basics Aa Aa The Chicago Board Options Exchange (CBOE) is one of the world's largest options exchanges. CBOE and other options exchanges trade contracts that give buyers and sellers the right to trade investment assets at a specific price within a specific time period. option gives the option holder the right to sell an asset at a fixed price during a particular period. The fixed price that the asset may be sold at is called the exercise price The Merry Melon Fruit Company stock was selling at $30 per share on the first day of this month If you had a call option on the first of the month . If you had a put option on the first of the month with an exercise price of $27 and if the option also expires on the first, the value of the option would be with an exercise price of $27 and if the option also expires on the first, the value of the option would be . If the call option expires in six months, the value . If the put option expires in six months and the than the of the option is likely to be difference in the stock price and exercise price of the call option at expiration. market expects the stock price to decrease, the value of the option is likely to

Explanation / Answer

put

call option Answers: (30 - 27) = 3

more

put options Answers: 0

more

call option value = 0

increase

put option value = 36 - 30 = 6

decrease

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