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Use the attached Excel template to answer the ques...

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Use the attached Excel template to answer the questions. Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $83. Option & NY Close Expiration Strike Price Calls Puts Vol. Last Vol. Last RWJ Mar 80 230 2.80 160 0.80 Apr 80 170 6.00 127 1.40 Jul 80 139 8.05 43 3.90 Oct 80 60 10.20 11 3.65 a. Are the call options in the money? What is the intrinsic value of an RWJ Corp. call option? b. Are the put options in the money? What is the intrinsic value of an RWJ Corp. put option? c. Two of the options are clearly mispriced. Which ones? At a minimum, what should the mispriced options sell for? Explain how you could profit from the mispricing in each case.

 

Paper#1738 | Written in 18-Jul-2015

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