A fund manager has been monitoring the performance of Virgin Galactic Corporation shares (NYSE: SPCE). The shares are currently trading at $34.8 on the New York stock exchange. The fund manager predicts that SPEC shares might rise in value over the next few months. He checked the market and found the related information on the options with a maturity of two months as below.Assume the number of underlying shares per contract is 100 shares. (i) Please specify the moneyness of the following options. Are they in the money, at the money or out of the money? (ii)Which option would you suggest the fund manager to purchase? Why? (iii)How much would it cost if the fund manager purchases options in (ii) that cover 1,000,000 shares (ii)?
A fund manager has been monitoring the performance of Virgin Galactic Corporation shares (NYSE: SPCE). The shares are currently trading at $34.8 on the New York stock exchange. The fund manager predicts that SPEC shares might rise in value over the next few months. He checked the market and found the related information on the options with a maturity of two months as below.Assume the number of underlying shares per contract is 100 shares.
(i) Please specify the moneyness of the following options. Are they in the money, at the money or out of the money?
(ii)Which option would you suggest the fund manager to purchase? Why?
(iii)How much would it cost if the fund manager purchases options in (ii) that cover 1,000,000 shares (ii)?
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