(Properties of option prices—the effect of time) The following options are traded on WOW Corporation’s stock on September 2015. State the property of option prices that is violated and show that you can design a strategy to profit from this mispricing.

Transcribed Image Text:

Exercise Expiration Option Price Date Price Call 40 1-Jan-2017 $13.50 Call 40 1-Jul-2017 $12.95