Chapter 03 · Section 3.1
Costs of Calls and puts
You are reading the Wall Street Journal and you see the following table:
C A L L P U T
Exercise M a r J u n S e p M a r J u n S e p
Price
30 10.15 10.85 11.65 0.05 0.35 0.85
35 5.40 6.90 8.10 0.25 1.35 2.15
40 1.90 4.00 5.35 1.75 3.40 4.35
45 0.40 2.10 3.45 5.30 6.50 7.40
50 0.05 1.05 2.15 10.05 10.50 11.15
Stock price: $40 Today's date: February
If you want to acquire the right to buy the underlying asset at $45 within 1 month, how much would that cost you per share?
d) $5.40
No. $5.40 is the price of the right to buy the underlying stock during 1 month at $35, not at $45.
e) $0.40
a) $5.30
b) $40.00
c) $45.00
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