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What is your net profit on the option

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Reference no: EM133153309

Question - You have taken along position in a call option on IBM common stock. The option has an exercise price of $176 and IBM's stock currently trades at $180. The option premium is $5 per contract.

Required -

a. How much of the option premium is due to intrinsic value versus time value?

b. What is your net profit on the option if IBM's stock price increases to $190 at expiration of the option and you exercise the option?

c. What is your net profit if IBM's stock price decreases to $170?

Reference no: EM133153309

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