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
• e) $.00
  Yes. The intrinsic value of an option, put or call, is never expressed as a negative number even if, as in our case, the difference between the price of the underlying asset and the exercise price is negative. Continue

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