Trufen Ltd.'s equity shares are quoted in the BSE for physical and de-mat based delivery. The derivatives of Trufen's shares are in the form of option. The share is presently traded in the market at the price of ₹50. The
CS Professional · Financial, Treasury and Forex Management · PYQS · June 2018
Trufen Ltd.'s equity shares are quoted in the BSE for physical and de-mat based delivery. The derivatives of Trufen's shares are in the form of option. The share is presently traded in the market at the price of ₹50. The following table indicates the quoted exercise price and its related premium for call option : Exercise Price Option Premium 48 6 50 4 55 5 60 7 Required to indicate for each exercise price, whether the option is At the money, Out of the money or In the money. Also calculate the intrinsic value and time value for each exercise price.
Answer & Explanation:
Option is call and market price is ₹50 Exercise price (₹) Option Premium (₹) Status Intrinsic value Time value 48 6 In the money 2 4 50 4 At the money 0 4 55 5 Out of money 0 5 60 7 Out of money 0 7
Topics: Derivatives
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