Construct a short put position using the put with exercise

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Reference no: EM132665928

The following information is available regarding call and put options on MSFT.

Exercise    Price Call           Price Put Price
$185.00 $3.80    $1.53
187.50    2.40    2.54
190.00    1.43 4.02

Current price of MSFT is $187.28

Problem 1: Construct a long call position using the call with an exercise price of $187.50. Make sure to graph the position at option expiration showing the maximum loss, maximum profit and stock price break even.

Problem 2: Construct a short put position using the put with an exercise price of $185. Make sure to graph the position at option expiration showing the maximum loss, maximum profit and stock price break even.

Problem 3: Compute the intrinsic value of the call with an exercise price of $185? What is the time value of the option?

Problem 4: Compute the intrinsic value of the call with an exercise price of $190? What is the time value of this option?

Reference no: EM132665928

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