Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

9-4 (c only) You have written a call option on Walmart common stock. The option has an exercise price of $79, and Walmart's stock currently

9-4 (c only)

image text in transcribed

You have written a call option on Walmart common stock. The option has an exercise price of $79, and Walmart's stock currently trades at $77. The option premium is $1.50 per contract. a. How much of the option premium is due to Intrinslc value versus time value? b. What is your net profit If Walmart's stock price decreases to $75 and stays there until the optlon explres? c. What is your net profit on the option if Walmart's stock price Increases to $85 at explration of the option and the option holder exercises the option? (For all requirements, negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g. 32.16)) Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. b. What is your net profit if Walmart's stock price decreases to $75 and stays there until the option expires? c. What is your net profit on the option if Walmart's stock price increases to $85 at expiration of the option and the option holder exercises the option? You have written a call option on Walmart common stock. The option has an exercise price of $79, and Walmart's stock currently trades at $77. The option premium is $1.50 per contract. a. How much of the option premium is due to Intrinslc value versus time value? b. What is your net profit If Walmart's stock price decreases to $75 and stays there until the optlon explres? c. What is your net profit on the option if Walmart's stock price Increases to $85 at explration of the option and the option holder exercises the option? (For all requirements, negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g. 32.16)) Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. b. What is your net profit if Walmart's stock price decreases to $75 and stays there until the option expires? c. What is your net profit on the option if Walmart's stock price increases to $85 at expiration of the option and the option holder exercises the option

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Options Futures And Other Derivatives

Authors: John C. Hull

7th Edition

0136015867, 9780136015864

More Books

Students also viewed these Finance questions