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You have written a call option on Walmart common stock. The option has an exercise price of $79, and Walmart's stock currently trades at $77.
You have written a call option on Walmart common stock. The option has an exercise price of $79, and Walmart's stock currently trades at $77. The option premium is $1.50 per contract. a. How much of the option premium is due to intrinsic value versus time value? b. What is your net profit if Walmart's stock price decreases to $75 and stays there until the option expires? c. What is your net profit on the option if Walmart's stock price increases to $85 at expiration of the option and the option holder exercises the option? (For all requirements, negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16)) Complete this question by entering your answers in the tabs below. Req A Req B and C How much of the option premium is due to intrinsic value versus time value? Option Premium Intrinsic value Time value Req A Req B and C> You have written a call option on Walmart common stock. The option has an exercise price of $79, and Walmart's stock currently trades at $77. The option premium is $1.50 per contract. a. How much of the option premium is due to intrinsic value versus time value? b. What is your net profit if Walmart's stock price decreases to $75 and stays there until the option expires? c. What is your net profit on the option if Walmart's stock price increases to $85 at expiration of the option and the option holder exercises the option? (For all requirements, negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16)) Complete this question by entering your answers in the tabs below. Req A Req B and C What is your net profit on the option if IBM's stock price increases to $75 at expiration of the option and you exercise the option and if IBM's stock price decreases to $85? b. Net profit per share c. Net profit per share Rea A Req B and C
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