What is the total per share value of options

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Question - Bryan Moynihan, the CEO of Bank of America (BofA) is granted ten thousand European call options on BofA stock. BofA's stock price as of today (the day options are granted) is $24 per share. Assume that options have a strike price that makes them 5 dollars out the money. The annual risk free rate is 2% and options expire in 24 months. The annual standard deviation of stock return for BofA is 30%.

(a) What is the strike or exercise price for these options?

(b) What is the intrinsic per share value of options owned by Bryan Moynihan as of today?

(c) What is the total per share value of options owned by Bryan Moynihan as of today. Use Black Scholes model to calculate the value and show your calculations.

(d) What is the per share time value of options owned by Bryan Moynihan as of today?

Reference no: EM132937210

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