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Category > Business & Finance Posted 02 May 2017 My Price 7.00

You have taken a long position in a call option

You have taken a long position in a call option on IBM common stock. The option has an exercise price of $136 and IBM’s stock currently trades at $140. The option premium is $5 per contract.

a. What is your net profit on the option if IBM’s stock price increases to $150 at expiration of the option and you exercise the option?

b. How much of the option premium is due to intrinsic value versus time value?

c. What is your net profit if IBM’s stock price decreases to $130?

 

 

Answers

Alpha Geek
(8)
Status NEW Posted 02 May 2017 06:05 PM My Price 7.00

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file 1493749759-answer1.docx preview (137 words )
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