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As the youngest (and last-to-join) member of a small investment firm, you were tasked with looking into acquiring some options on TSLA and analyzing
As the youngest (and last-to-join) member of a small investment firm, you were tasked with looking into acquiring some options on TSLA and analyzing quotes from different brokers. We assume that TSLA price is $850, no dividend will be paid and the risk-free rate is 2.35%. Based on the quotes below, which broker should you use assuming both have similar transaction costs? Show all details and explain clearly your steps. (4 marks) Quotes from Broker A Strike Option Maturity (yrs) Price 840 Call 0.53 76.86 850 Call 0.48 64.13 860 Call 0.23 35.76 845 Put 0.72 62.99 855 Put 0.91 82.68 865 Put 1.05 93.70 Quotes from Broker B Strike Option Maturity (yrs) Price 925 Call 0.43 45.43 950 Call 0.89 57.68 1000 Call 1.12 47.56 910 Put 0.34 87.20 945 Put 0.15 101.82 985 Put 0.62 161.60
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