LuleLk 19 WUIK Problem 3-16 Using Options Quotations (LO4, CFA4) Use the following quotes for JCPenney stock options: points November 27, 2015 The Money List Straddle Lookup Option eBook Calls Strike "Fiter Contract Name Last Bid Ask Change %Change Volume Open Interest Implied Volatility 8.00 1.62 1.89 0.00 0.00% 56.45% Print 9.00 0.98 0.00 0.00% 51.95% 1.10 0.78 9.50 0.00 0.00% 50.00% References JCP151127C00008000 JCP151127C00009000 JCP151127C00009500 JCP151127C00010000 JCP151127C00010500 JCP151127C00011000 1.79 1.00 0.69 0.44 0.26 0.15 10.00 0.00 0.00% 0.74 0.40 0.28 0.16 45.12% 0.48 0.29 10.50 12.00% 43.75% 0.03 -0.01 11.00 0.18 -5.88% 44.34% Puts Strike Contract Name Last Bid Ask Change %Change Volume Open Interest Implied Volatility Fiter 7.00 0.00% 67.58% 0.00 0.00 0.31 0.00% 53.13% 8.50 9.00 JCP151127P00007000 JCP151127P00008500 JCP151127P00009000 JCP151127P00009500 0.03 0.18 0.29 0.47 0.08 0.21 0.33 0.50 0.41 0.00 0.00% 50.20% 9.50 0.65 0.00 0.00% 49.22% References Assume you purchased the right to sell 3,100 shares of JCPenney stock in November 2015 at a strike price of $9.00 per share. Suppose the stock sells for $8.00 per share immediately before your options' expiration. What is the rate of return on your investment? What is your rate of return if the stock sells for $10.00 per share? Assume your holding period for this investment is exactly three months. (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your 3-month returns as a percent rounded to 2 decimal places.) 60.18% Return on investment at $8.00 Return on investment at $10.00