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Please answer the below questions with solutions ASAP! Thanks. 6. The table below contains the implied volatility and option price for a series of call
Please answer the below questions with solutions ASAP!
Thanks.
6. The table below contains the implied volatility and option price for a series of call options of varying strike prices and varying time to expiration. The current stock price is s74.90. Suppose I want to buy the at-the-money option which is relatively cheapest. Which option should I buy? Actual option price Implied Volatility December January April December January April (T 0.17) (T 0.25) (T 0.50 T 0.1 T 0.25 6.95 4.35 5.89 0.300 0.280 0.320 70 2.46 3.02 4.40 0.284 0.275 0.290 1.13 2.20 0.77 0.257 0.269 0.285 a. December, X-75 b. January, X-75 c. April, X-75 d. January, X-70 e. December, X-80
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