Take Home Quiz 1A Name:olom wa On September 1, 2018, S8Ux share is traded at $58
ID: 2811583 • Letter: T
Question
Take Home Quiz 1A Name:olom wa On September 1, 2018, S8Ux share is traded at $58.59 per share. The following CALL options, which expire in October, are quoted by your Dealer at the following prices: (2 points) 1. Bid Price 3.45 1.86 0.75 0.21 Ask Price 3.55 1.88 0.77 0.23 Strike Price 55.00 60.00 62.50 a. If you were to SELL SBUx Oct 57.50 Call, how much would you receive on a per share basis? b. Compute the intrinsic values of the above options as of September 1, 2018 using their ask prices Intrinsic Value Max(0, S-K) Computation In/Out of the Strike Price s- I Money 55.00 57.50 60.00 62.50 c. Compute the time value of the following options as of September 1, 2018 using their ask prices. Call Option Strike Price Intrinsic Value Time Value Ask Price IV+TV 55.00 57.50 60.00 62.50 d. Whi ch of the above call options is (are) mispriced? Explain briefly. If so, how would you take advantage of the arbitrage opportunity?Explanation / Answer
A) in the above question if he sells at $57.50 he recives per share is 1.88/-
B) intrinsic value for the SBUX COMPANY
STRIKE PRICE UNDERLYING VALUE U-S, INTRINSIC VALUE IN/OUT THE MONEY 55.00 58.59 3.59 IN THE 57.50 58.59 1.09 IN THE 60.00 58.59 0 OUT THE 62.50 58.59 0 OUT THE
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