What is your net profit on the option if ibms stock price

Assignment Help Financial Management

Reference no: EM132021923

You have taken a long position in a call option on IBM common stock. The option has an exercise price of $139 and IBM's stock currently trades at $145.

The option premium is $7 per contract.

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

Option Premium

Intrinsic value $

Time value

b. What is your net profit on the option if IBM's stock price increases to $155 at expiration of the option and you exercise the option? (Negative amount should be indicated by a minus sign.)

Net profit $

per share

c. What is your net profit if IBM's stock price decreases to $135? (Negative amount should be indicated by a minus sign.)

Net profit $

per share

Reference no: EM132021923

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