Chapter 03 · Section 3.1
Option pricing
Option A Option B Option C
Option type: American Call American Call American Call
Exercise price: $ 290 $ 290 $ 290
Underlying asset: stock A stock A stock A
Price of stock A: $ 300 $ 300 $ 300
Expiration date: March June September
Today's date: March March March
Option A should be quoted at:
b) $5
No. With option A you have the right to buy the stock A at $290. The stock price is $300. Option A has intrinsic value of more than $5.
c) $10
d) $15
a) $0
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