A LEAPS call with an expiration date of two years is an option to buy stock at
Question:
A LEAPS call with an expiration date of two years is an option to buy stock at $24.
The current market price of the stock is $35, and the market price of the LEAPS is $15.
a) What is the option’s intrinsic value?
b) What is the time premium paid for the LEAPS?
c) If after two years the stock is selling for $50, what will be the price of the LEAPS?
What is the percentage increase in the value of the stock and in the value of the option?
d) Why does the time premium disappear?
e) If after two years the stock is selling for $22, what will be the price of the LEAPS?
What is the percentage decrease in the value of the stock and in the value of the option?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answered By
Muhammad Umair
I have done job as Embedded System Engineer for just four months but after it i have decided to open my own lab and to work on projects that i can launch my own product in market. I work on different softwares like Proteus, Mikroc to program Embedded Systems. My basic work is on Embedded Systems. I have skills in Autocad, Proteus, C++, C programming and i love to share these skills to other to enhance my knowledge too.
1+ Reviews
10+ Question Solved
Related Book For 
Question Posted:
