Assume the following real information on IBM calls and puts as of May 29, 2009 (from Yahoo!-

Finance). For example, the symbol IBMFA.X is the IBM 105.00 call for June 2009. The IBM price was $106.28, and these options were expiring on Friday, June 9, 2009. Answer the questions below the chart.

a. Which options are in the money and which are out of the money?

b. What are the meanings of “volume” and “open interest”?

c. Why do the call option prices decline while the put option prices increase?

d. What are the “bid” and “ask” prices and what does the difference between the two mean?

e. Define the following: the in-the-money call, the put options’ call, and put premiums.
(Hints: Call premium = option price – (stock price – strike price); use the last- column prices.)

f. What are the out-of-the-money call and put premiums?