Problem 17-1 Understanding Option Quotes

Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $70.

Option and						Calls						Puts
NY Close	Expiration			Strike Price		Vol.			Last			Vol.			Last
RWJ
		Mar		65			240			4.20			170			4.30
		Apr		65			180			10.05			137			9.05
		Jul		65			149			10.90			53			12.35
		Oct		65			70			11.80			21			11.45

a-1. Are the call options in or out of the money?

In

Out

a-2. What is the intrinsic value of an RWJ Corp. call option? (Do not round intermediate calculations.) Intrinsic value $ b-1. Are the put options in or out of the money?

In

Out

b-2. What is the intrinsic value of an RWJ Corp. put option? (Do not round intermediate calculations.) Intrinsic value $ c. Two of the options are clearly mispriced. Which ones? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

Mar callunchecked

Apr callunchecked

Oct callunchecked

Mar putunchecked

Oct putunchecked

Apr put