Question

Please show work step by step, NO EXCEL. Thank you!

A2. (Recognize puts and calls) Indicate whether the stock price, strike price, and exercise value given here are for a call option or a put option.

stock price	strike price	exercise value	type of option put or call?
$65	$60	$0
25	20	5
15	30	15
97	105	0

Answer 1

1. Value of call option is positive if stock price > Strike price

2. Value of call option is nil if stock price < Strike price

3. Value of put option is positive if stock price < Strike price

4. Value of put option is nil if stock price > Strike price

tock price	strike price	exercise value	type of option put or call?	Reason
65	60	0	put	refer point 4 above
25	20	5	call	refer point 1 above
15	30	15	put	refer point 3 above
97	105	0	call	refer point 2 above