Question

A crude oil call option has an exercise price of $48 when its spot price is...

  1. A crude oil call option has an exercise price of $48 when its spot price is $46.29. If the call option is trading at $0.58, what is its intrinsic value?
  2. $0
  3. $0.58
  4. $1.71
  5. $46.87
  6. $47.42
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Intrinsic value of option is the difference between stock price and the exercise price of the option
Intrinsic value of call option = 46.29 - 48
Intrinsic value of call option -$1.71
Since the value calculated above is negative it means it is not in the money call option since the stock is available at cheaper rate in the market then if the option is exercise
Therefore the intrinsic value of call option is 0
Correct answer is $0
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. A put option has an exercise price of $30 and a stock price of $25....
1. A put option has an exercise price of $30 and a stock price of $25. If the put option is trading for $5.25, what is the intrinsic value of the option? a. $1 b. $2 c. $3 d. $5 2. A call option has an exercise price of $30 and a stock price of $34. If the call option is trading for $5.25, what is the intrinsic value of the option? a. $0.00 b. $1.25 c. $4.00 d. $5.25...
•A call option has an exercise price of $50. What is the value of the call...
•A call option has an exercise price of $50. What is the value of the call option at expiration if the stock price is $35? $75? •A put option has an exercise price of $30. What is the value of the put option at expiration if the stock price is $25? $40?
Suppose the current spot rate for the DM is $0.5925. The call premium on a call...
Suppose the current spot rate for the DM is $0.5925. The call premium on a call option with an exercise price of $0.5675 is $0.0373. What is the intrinsic value of one DM 62,500 call option? What is the time value of one DM 62,500 call option?
assuming the current spot price of gold is $1.86 , a three month call option on...
assuming the current spot price of gold is $1.86 , a three month call option on 1000 ounces of gold has an exercise price of $1.80 and a premium of $0.24 . if after two months the price per ounce of gold is $2.10 and the premium on this option is now $0.36 . should the investor trade or exercise this option?
When the exercise price goes up, the price of the call option on the stock will...
When the exercise price goes up, the price of the call option on the stock will ______; and the price of the put option on the stock will ________. (go up/ go down)
Find the price of an American call option on a futures if the current spot price...
Find the price of an American call option on a futures if the current spot price is 30, the exercise price is 25, the futures price is 33.70, the risk-free interest rate is 6 percent, the spot asset can go up by 10 percent or down by 8 percent per period and the call expires in two periods, which is also when the futures expires. A. 9.98 B. 8.70 C. 7.73 D. 8.22 E. none of the above please show...
The crude oil futures price expiring in 9 months from now is $120 while the spot...
The crude oil futures price expiring in 9 months from now is $120 while the spot price of crude oil is $115. If the risk-free rate is 5% and the storage cost yield is 2%, both continuously compounded annual rates, what is the implied convenience yield of the crude oil? A. 1.21% B. 1.28% C. 1.33% D. 2% E. None of the above
b) Given that you have bought a Call Option to purchase Brent Blend crude at a...
b) Given that you have bought a Call Option to purchase Brent Blend crude at a Strike Price of $49/bbl for a volume of 200,000 barrels. You have paid a premium of $2.50/bbl to the counterparty of the contract. During the month in which the option is exercisable, Brent Blend is trading at $52.46/bbl. Critically evaluate whether you would exercise your Call Option and make a valid judgement based on numerical calculations.
The spot price for crude oil is $30 per barrel. The storage cost is 2.5% per...
The spot price for crude oil is $30 per barrel. The storage cost is 2.5% per annum. The risk-free interest rate is 7.5% with continuous compounding. The futures price for a one-year contract on crude oil should be __________. A) $31.59                          B) $32.08                    C) $33.16                    D) $34.51
A trader who is short a European call option: A) Has the same rights as a...
A trader who is short a European call option: A) Has the same rights as a long European call option holder B) Profits when the spot price at expiry is greater than the exercise price. There is no limit to potential profit C) Profits when the spot price at expiry is less than the exercise price. The maximum profit is equal to the option premium D) At formation of the contract, will have received more for the option than the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT