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You have taken a long position in a call option on IBM common stock. The option has an exercise price of $176 and IBMs stock
You have taken a long position in a call option on IBM common stock. The option has an exercise price of $176 and IBMs stock currently trades at $180. The option premium is $5 per contract. (LG 10-4)
How much of the option premium is due to intrinsic value versus time value?
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What is your net profit on the option if IBMs stock price increases to $190 at expiration of the option and you exercise the option?
What is your net profit if IBMs stock price decreases to $170?
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Introduction To Estimating Economic Models
Authors: Atsushi Maki
1st Edition
0415589878, 978-0415589871
