Chapter 03 · Section 3.1

Calls and Puts-Intrinsic Value

                    CALL                          PUT         
 Exercise    Mar      Jun      Sep           Mar      Jun     Sep 
 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         

• a) $5.40
  No. $5.40 is the premium. As you know, the premium has two components: the intrinsic value and the time value.
  b) $40.00
  c) $35.00
  d) 0.40
  e) $5.00

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