Look at the Opti-tech call option prices in Table. Call prices increase as the strike price decreases,
Question:
Strike Price
In finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity.
Company Expiration Strike Calls Puts OPTI 30.00 30.00 30.00 30.00 30.00 30.00 30.00 30.00 30.00 30.00 30.00 Apri 27.50 3.26 0.67 May 27.50 3.9 1.23 July 27.50 4.91 2.04 Apri 30.00 1.77 1.67 May 30.00 July 30.00 3.62 3.23 April32.50 0.85 3.24 May 32.50 55 383 July 32.50 262 4.69 April 35.00 0.36 5.24 May July 35.00 1.86 6.40 2.53 2.33 35.00 0.90 5.67
Step by Step Answer:
No the option value does not change by 250 each time the strike price changes by 250 For example lo...View the full answer
Introduction to Corporate Finance
ISBN: 978-0324657937
2nd edition
Authors: Scott B. Smart, William L Megginson
Related Video
A call option is a type of financial contract that gives the holder the right, but not the obligation, to buy an underlying asset (such as a stock, commodity, or currency) at a specified price (called the strike price) within a specified period of time. When an investor purchases a call option, they are essentially betting that the price of the underlying asset will rise above the strike price before the option\'s expiration date. If the price of the asset does rise above the strike price, the investor can exercise the option by buying the asset at the strike price and then selling it at the higher market price, thereby earning a profit. Call options are often used as a speculative investment strategy, as they allow investors to potentially profit from the upward movement of an asset without having to actually own the asset itself. They are also commonly used as a hedging tool to protect against potential losses in a portfolio.
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