a)
18.90
b) 7.14
c) 2.86
d) 26.04
The
correct answer is c.
First, remember that OEX is the symbol for
the S&P 100 index. The premium in an options contract
is composed of both intrinsic value and time value.
The intrinsic value of the Sept 510 call is 26.04
since the index closed at 536.04. In a call, subtract
the strike price from the market price to find intrinsic
value (536.04510 = 26.04). Subtract the intrinsic
value from the premium to find the time value (28.9026.04
= 2.86).
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