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The date is early September 2020 and the last traded price on BHP shares is $37.41 . A selection of American call options on BHP
The date is early September 2020 and the last traded price on BHP shares is $37.41. A selection of American call options on BHP are shown above. A number of anomalies occur in the prices displayed in the table. Choose one of the following statements that best describes all of the anomalies in the prices.
Not yet answered Series Ex Last Price Sale Marked out of 1.00 Sep 20 36.50 1.230 Flag question Sep 20 37.00 0.885 Sep 20 37.50 0.600 Oct 20 36.50 1.200 Oct 20 37.00 1.455 Oct 20 37.50 1.180 The date is early September 2020 and the last traded price on BHP shares is $37.41. A selection of American call options on BHP are shown above. A number of anomalies occur in the prices displayed in the table. Choose one of the following statements that best describes all of the anomalies in the prices. Select one: O a. The Sep 20 (K=36.50) price is too high relative to the Sep 20 (K=37.00) price, because there is an arbitrage opportunity. b. The Oct 20 (K=36.50) price is too low relative to the Sep 20 (K=36.50) because the Oct 20 (K=36.50) call option has a longer maturity than the Sep 20 (K=36.50) call option. O c. The Oct 20 (K=37.50) price is too low compared to the price for the Oct 20 (K=37.00) call option. O d. The Oct 20 (K=36.50) price is too low relative to the Oct 20 (K=37.00) because the Oct 20 (K=36.50) call option should have a higher price than the Oct 20 (K=37.00) call option, because it has a lower strike price. O e. Both a and b are correct O f. Both b and d are correct O g. Both a and d are correct O h. All of a, b, c and d are correct Not yet answered Series Ex Last Price Sale Marked out of 1.00 Sep 20 36.50 1.230 Flag question Sep 20 37.00 0.885 Sep 20 37.50 0.600 Oct 20 36.50 1.200 Oct 20 37.00 1.455 Oct 20 37.50 1.180 The date is early September 2020 and the last traded price on BHP shares is $37.41. A selection of American call options on BHP are shown above. A number of anomalies occur in the prices displayed in the table. Choose one of the following statements that best describes all of the anomalies in the prices. Select one: O a. The Sep 20 (K=36.50) price is too high relative to the Sep 20 (K=37.00) price, because there is an arbitrage opportunity. b. The Oct 20 (K=36.50) price is too low relative to the Sep 20 (K=36.50) because the Oct 20 (K=36.50) call option has a longer maturity than the Sep 20 (K=36.50) call option. O c. The Oct 20 (K=37.50) price is too low compared to the price for the Oct 20 (K=37.00) call option. O d. The Oct 20 (K=36.50) price is too low relative to the Oct 20 (K=37.00) because the Oct 20 (K=36.50) call option should have a higher price than the Oct 20 (K=37.00) call option, because it has a lower strike price. O e. Both a and b are correct O f. Both b and d are correct O g. Both a and d are correct O h. All of a, b, c and d are correctStep by Step Solution
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