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Which of the following options is the most expensive? Why? Option Premium (AOL) Implied Volatility K May June July 120 8.75 15.40 20.90 125 5.75

  1. Which of the following options is the most expensive? Why?
Option Premium (AOL) Implied Volatility
K May June July
120 8.75 15.40 20.90
125 5.75 13.50 18.60
130 3.6 11.35 16.40

image text in transcribed
Implied Volatilities of AOL Calls S0=125.9375,rc=.0447(May),.0446(June),.0453(July),T=.0192(May),.0959(June),.1726(July) Implied Volatilities of AOL Calls S0=125.9375,rc=.0447(May),.0446(June),.0453(July),T=.0192(May),.0959(June),.1726(July)

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