5. From the above table calculate each option's Intrinsic Value and Time Value. (For Intrinsic and Time Value, assume the options are American). Also, if you assume the options are European, what level would the stock price need to trade at expiration for a trader to break-even if they bought (or sold) the options at the prices given (ignore interest) IV TV $300 Strike Call $300 Strike Put $305 Strike Call $305 Strike Put 6. What is the minimum value (lower bound) of the Call above with the $305 strike price (assume it is European)? What is the maximum value of the $300 strike put if it was European? If you sold the $305 strike call at the $38.35 premium, what is the maximum you could lose at 7. 8. expiration (careful!)? If you sold the $300 strike put at the $35.85 premium, what is the maximum total loss you could be subject to? 9. 10. Which set of options (the $300 strike or the $305 strike) violate European Put/Call Parity and by how much? (Must show your calculations for credit). 5. From the above table calculate each option's Intrinsic Value and Time Value. (For Intrinsic and Time Value, assume the options are American). Also, if you assume the options are European, what level would the stock price need to trade at expiration for a trader to break-even if they bought (or sold) the options at the prices given (ignore interest) IV TV $300 Strike Call $300 Strike Put $305 Strike Call $305 Strike Put 6. What is the minimum value (lower bound) of the Call above with the $305 strike price (assume it is European)? What is the maximum value of the $300 strike put if it was European? If you sold the $305 strike call at the $38.35 premium, what is the maximum you could lose at 7. 8. expiration (careful!)? If you sold the $300 strike put at the $35.85 premium, what is the maximum total loss you could be subject to? 9. 10. Which set of options (the $300 strike or the $305 strike) violate European Put/Call Parity and by how much? (Must show your calculations for credit)
