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Question
ABC, which closed at $151, has call options trading in April, July, and October with the following values:
| ------------Calls------------- | |||
Options/Strike | April | July | October | |
ABC | 140 | 11 ¼ | 11 ¾ | 13 |
151 | 150 | 1 ½ | 3 | 4 |
151 | 160 | ¾ | 1 ½ | 2 |
(a) Calculate the intrinsic value of the April 150 call.
(b) Calculate the intrinsic value of the April 140 call.
(c) Should the price of ABC rise to $156, what is the minimum value that the April 150 call should trade at?
Answer
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