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a) An option value has two parts, an intrinsic value, and a time value. i) If a stock is currently trading at $50 and a
a) An option value has two parts, an intrinsic value, and a time value. i) If a stock is currently trading at $50 and a call option with a strike price of $55 is trading at $8.98, what is the intrinsic value of this option? What is the time value of the option?
ii) If a stock is currently trading at $50 and a put option with a strike price of 55 is trading at $11.30, what is the intrinsic value of this option? What is the time value of the option?
b) What are four major differences between forward and future contracts?
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