The common stock of Teledync trades on the NYSE. Teledyne has never paid a cash dividend. The stock is relatively risky. Assume that the beta for Teledyne is 13 and that Teledyne closed at a price of $162. Hypothetical option quotes on Teledyne are as follows: Problems 537 Pue Strike Price Apr Jul 140 2312 150 8 7/8 3 344 170 not tradet sno option offered 19-2 19-3 Based on the Teledyne data answer the following: a. Calculate the intrinsic value of the April 140 and the October 170 calls. b. Calculate the intrinsic value of the April 140 and the October 170 puts. c. Explain the reasons for the differences in intrinsic values between a and b. Using the Teledyne data, answer the following: a. What is the cost of 10 October 150 call contracts in total dollars? From the text, what is the commission? Total cost? b. What is the cost of 20 October 160 put contracts in total dollars? What is the commission? Total cost? c. On the following day. Teledyne closed at $164. Which of the options would you have expected to increase? Decrease? d. The new quote on the October 150 call was 26. What would have been your one-day profit on the 10 contracts? e. The new quote on the October 160 put was 7 112. What would have been your one-day profit on the 20 contracts? f. What is the most you could lose on these 20 contracts? You are conside 19.4 The common stock of Teledync trades on the NYSE. Teledyne has never paid a cash dividend. The stock is relatively risky. Assume that the beta for Teledyne is 13 and that Teledyne closed at a price of $162. Hypothetical option quotes on Teledyne are as follows: Problems 537 Pue Strike Price Apr Jul 140 2312 150 8 7/8 3 344 170 not tradet sno option offered 19-2 19-3 Based on the Teledyne data answer the following: a. Calculate the intrinsic value of the April 140 and the October 170 calls. b. Calculate the intrinsic value of the April 140 and the October 170 puts. c. Explain the reasons for the differences in intrinsic values between a and b. Using the Teledyne data, answer the following: a. What is the cost of 10 October 150 call contracts in total dollars? From the text, what is the commission? Total cost? b. What is the cost of 20 October 160 put contracts in total dollars? What is the commission? Total cost? c. On the following day. Teledyne closed at $164. Which of the options would you have expected to increase? Decrease? d. The new quote on the October 150 call was 26. What would have been your one-day profit on the 10 contracts? e. The new quote on the October 160 put was 7 112. What would have been your one-day profit on the 20 contracts? f. What is the most you could lose on these 20 contracts? You are conside 19.4
