b. 4406 C. .4419 Section B (a) What is the cost of three August 35 call option c
ID: 2805735 • Letter: B
Question
b. 4406 C. .4419 Section B (a) What is the cost of three August 35 call option contracts on BeTa stock given the wing price quotes? TaBTA) Underlying stock price: 31.12 Put Last 10 15 20 4.10 4.75 Call xpiration Strike Last 6.80 Aug Nov Aug Nov 25 25 35 35 7.10 85 (b) What is the intrinsic value of the August 35 put? BeTa(BTA) Underlying stock price: 31.12 Last 6.80 7.10 20 85 Put Last 10 15 4.10 Expiration Strike 25 25 35 35 Aug Nov Aug Nov 4.75 29. (a). You purchased eight WAN call option contracts with a strike price of $27.50 when the option was quoted at $0.60. The option expires today when the value of WAN stock is $28.20 Ignoring trading costs and taxes, what is your net profit or loss on your investment? (b) You wrote (i.e., sold) one call option contract with a strike price of $42.50 when the option was quoted at $1.10. The option expires today when the value of the underlying stock is $38.10. Ignoring trading costs and taxes, what is your net profit or loss on your investment?Explanation / Answer
A. Cost of three Aug 35 call options = 0.20*3= 0.60$
B. Intrinsic value of Aug 35 put
Underlying price= 31.12
Gain on exercising put option= 35- 31.12= 3.88$ which is the intrinsic value of put option.
29. A. Gain per contract= 28.2- 27.5-0.6= 0.1 *100= 10$
Total gain= 10*8= 80$
Assumed 100 shares per option contract.
B. When you wrote the call option you will gain if the underlying price decreases as the option expires worthless.
Here the option expires worthless.
Gain = 1.1$( premium received)
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