Suppose you are offered an option on an asset. This option gives you the right to buy the asset for $1,000 any time before December 31st of this year. Currently, this asset is worth $800.

a. Is this a call option or a put option?

b. What determines the value of this option?

c. Currently, is this option “at-the-money,” in-the-money,” or “outof-

the money”?

d. Since the exercise price is more than the asset’s value today, does this mean the option is worthless? Explain.