1. Business
  2. Finance
  3. please please answer asap pleaseeeeeee six months ago you sold...

Question: please please answer asap pleaseeeeeee six months ago you sold...

Question details

PLEASE PLEASE ANSWER ASAP PLEASEEEEEEE

 

Six months ago, you sold an American call option for $3.  The option is about to expire.  It has an exercise price of $25 and a premium of $5.  The underlying asset is selling for $27.

a)      How would you describe this option: in‐the‐money, at‐the‐money or out-of-the-money?  (2 marks)

b)      What is the intrinsic value of this call option? (2 marks)

c)      What is the time value of this call option? (2 marks)

d)      What would your overall profit or loss be if the option is expired immediately? (2 marks)

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution