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) $3.45
b) -$5.00
c) $3.00
• d) $5.00
  No. If this were a put option, the intrinsic value would be $5.00. Remember For a call option:Intrinsic value=Underlying asset price - Exercise price. For a put option: Intrinsic value = Exercise price - Underlying asset price.
  e) $.00

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