Saturday, November 9, 2019

You own eight call option contracts on Swift Water Tours stock with a strike price of $15. When you purchased the shares


You own eight call option contracts on Swift Water Tours stock with a strike price of $15. When you purchased the shares the option price was $0.30 and the stock price was $15.25. What is the total intrinsic value of these options if the stock is currently selling for $16.08 a share? 
 
A. 
-$83

B. 
-$1.08

C. 
$0

D. 
$108

E. 
$864
Intrinsic value = ($16.08 - $15) × 100 × 8 = $864


70.
You recently purchased three put option contracts on Guillepsi stock with an exercise price of $42.50. What is the total intrinsic value of these contracts if the stock is currently selling for $45 a share? 
 
A. 
-$360

B. 
-$120

C. 
$0

D. 
$120

E. 
$360
The intrinsic value is equal to zero because the puts are out-of-the-money.


71.
Last week, you purchased a call option on Edgewater stock with a strike price of $40. The stock price was $39.80 and the option price was $0.45 at that time. What is the intrinsic value per share if the stock is currently priced at $39.10? 
 
A. 
-$90

B. 
-$70

C. 
$0

D. 
$70

E. 
$90
The intrinsic value is zero because the call is currently out-of-the-money.


72.
Three weeks ago, you purchased a June $30 put option on Leeper Metals stock at an option price of $1.80. The market price of the stock three weeks ago was $30.60. Today, the stock is selling at $27.50 a share. What is the intrinsic value of your put contract? 
 
A. 
-$100

B. 
-$20

C. 
$0

D. 
$250

E. 
$360
Contract intrinsic value = ($30 - $27.50) × 100 = $250

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