Question
You have written a call option on Walmart common stock. The option has an exercise price of $76, and Walmarts stock currently trades at $74.
You have written a call option on Walmart common stock. The option has an exercise price of $76, and Walmarts stock currently trades at $74. The option premium is $1.35 per contract. a. How much of the option premium is due to intrinsic value versus time value? b. What is your net profit if Walmarts stock price decreases to $72 and stays there until the option expires? c. What is your net profit on the option if Walmarts stock price increases to $82 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))
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