Coca-Cola currently has a stock price of $46.75. It also has eight options available with the following Expiration Date, Strike Price (Exercise Price), and Option Price. For Example, you can buy a Feb 50 Call for $.2 (or you could sell it for $.2). The risk free rate between now and Feb is 1% while the risk free rate between now and May is 2%.

Expiration Strike Discounted Call Put

Month Price Value Price Price

Feb 45 44.55 .35

Feb 50 49.50 .2 3.30

May 45 3.2 .57

May 50 49.02 .6 3.50

7. What is the Time Value of the May 50 Put option?

a) $0.25 b) $1.75 c) $2.90 d) $3.25

8. Using Put-Call Parity, what is the value of the Feb 45 Call option?

a) $1.15 b) $1.85 c) $2.05 d) $2.55

9. Suppose you sell a May $45 Put and buy a May $50 put and the stock price ends up being $47. What is your total gain or loss (including the purchase and sell of the original option?

a) Lost $2.93 b) Lost $1.07 c) Made $.07 d) Made $2.93

10. Which option has the highest Time Value?

1. Feb 45 Put
2. Feb 50 Call
3. May 45 Call
4. May 50 Put