TABLE 23.2

SampleWall Street JournalFutures Option Price Quotations

SOURCE

: Reprinted by permission ofThe Wall Street Journal, 2011 Dow Jones & Company, Inc., March 30, 2011. All Rights Reserved Worldwide.

(Ross 768)

Ross, Stephen, Randolph Westerfield, Bradford Jordan.Fundamentals of Corporate Finance Alternate Edition, 10th Edition. McGraw-Hill Learning Solutions, 01/2012. VitalBook file.

Refer to Table 23.2 in the text to answer this question. Suppose you purchase the July 2011 call option on orange juice futures with a strike price of $1.40. How much does your option cost per pound of orange juice? What is the total cost? Suppose the price of orange juice futures is $1.29 per pound at expiration of the option contract. What is your net profit or loss from this position? What if orange juice futures prices are $1.67 per pound at expiration?