Recently, Facebook (FB) stock closed at $162.86 per share on a given day, up $3.13 on the day.

Consider the following chart giving the premium as of various options on FB stock which mature on Aug. 18 (from cboe.com):

Chart Attached

In the questions that follow, use the ?Last? column to answer questions which involve option pricing. Note that the strike price is given as the last three numbers in the column marked ?Strike.? For example, ?FB1718H155-E? is the option with a strike price of $155.

1a.What was the premium on the FB 165 call, i.e., the Microsoft call which expires on Aug. 18 and has a strike price of $165?

1b.How much would an investor who had wanted to buy 1 contract of this option have had to spend?

1c.What is the formula for the intrinsic value of a call? What was the intrinsic value of the Aug. 18 FB call which has a strike price of $155? Was this option ?in the money? or ?out of the money?? What was the time value of this option? What does the time value of an option represent?

1d.Was the Aug. 18 FB 165 call in or out of the money? What was the intrinsic value of this option? What was the time value of this option?

1e.What was the premium on the Aug. 18 FB 165 put? Was this option in or out of the money? What was the intrinsic value of this put? What was the time value?

1f.What was the intrinsic value of the Aug. 18 FB 160 put? Was this option in or out of the money? What was the option?s time value?