The Chicago Board Options Exchange (CBOE) is one of the world's largest options exchanges. CBOE and other options exchanges trade contracts that give buyers and sellers the right to trade investment assets at a specific price within a specific time period. option gives the option holder the right to sell an asset at a fixed price during a particular period. The forced price that the asset may be sold at is called the exercise price. The following table shows the options quotation in U.S. dollars for Purple Pigeon Bird Seed Company for June 30 of this year. Option 1 Closing Price Strike Price $47.50 $51.50 $47.50 $42.50 $47.50 $53.50 Call - Last Quote Put - Last Quote September September $5.00 $5.50 $7.50 $3.00 $4.00 $6.50 2 If you could exercise the options listed only on the expiration date (the third Friday of September), then these options would be options. Assume that the options listed in the table are American options. Which of the put options for Purple Pigeon Bird Seed Company listed in the table are in-the-money on June 307 Option 1 and option 3 Only option 2 O All of the options O None of the options The Purple Pigeon Bird Seed Company stock was selling at $50 per share on the first day of this month. If you had a put option on the first of the month with an exercise price of $45 and if the option also expires on the first, the value of the option would be If the put option expires in six months and the market expects the stock price to decrease, the value of the option is likely to If you had a call option on the first of the month with an exercise price of $45 and if the option also expires on the first, the value of the option would be If the call option expires in six months, the value of the option is likely to be than the difference in the stock price and exercise price of the call option at expiration Now suppose you have another call option and a put option. The selling price of Purple Pigeon's stock is $50 per share on the first day of this month and the exercise price for both the call and put options is $60. If the exercise price of the put option is $60 and the option expires on the first, the value of the option is If the put option expires in six months and the market expects the stock price to increase, the value of the put option is likely to If the exercise price of the call option is $60 and the option expires on the first, the value of the option is If the call option expires in six months and the market expects the stock price to increase, the value of the call option is likely to
