28. (a) What is the cost of three August 35 call option contracts on BeTa stock

Question

28. (a) What is the cost of three August 35 call option contracts on BeTa stock given the following price quotes? Underlying stock price: 31.12 Put BeTa(BTA) Call Expiration Strike Lst Last .10 15 4.10 4.75 6.80 Aug Nov Aug Nov 25 25 35 35 7.10 20 85 (b) What is the intrinsic value of the August 35 put? BeTa(BTA) Underlying stock price: 31.12 Call Put Expiration Strike Last Last Aug Nov Aug Nov 25 25 35 35 6.80 7.10 20 85 .10 .15 4.10 4.75 t iitht WAN call option contracts with a strike price of $27.50 w CIAN stock is $2

Explanation / Answer

A) Cost of 3 August 35 call option = 3*0.20 = 0.60$

B) Oprion premium is made up pf 2 parts

1) Intrinsic value in case of in the money option (For put option it is strike price-stock price)

2) Time value portion

Now intrinsic value of August 35 put option = 35-31.12 =3.88$

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