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Assume that call option I's strike price is $50, and call option II's strike price is $52, the expirations of both options are the same.
Assume that call option I's strike price is $50, and call option II's strike price is $52, the expirations of both options are the same. The underline stock of both call option contracts is the same. Option I's price is $5.6 and option II's price is $4.5. The implied volatility of option I is 30% and the implied volatility of option II is 25% using Black Scholes formula. Option___might be relatively underpriced and you may ___option I and___option II.
A. II, sell, buy
B. II, buy, sell
C. I, sell, buy
D. I, buy, sell
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