On June 1, 2021, Crafton Corp. purchased a call option on shares of XYZ stock. The contract was for 100 shares at a strike price of $130 per share, with an expiration date of August 31, 2021. The option contract premium was $40. On June 30, a market appraisal estimated the time value of the option to be $30. Crafton settled the option contract on August 10. Prices of XYZ stock during the option period are provided below. June 1 $130 June 30 $134 August 10 $139 What was the intrinsic value of the call option contract as of June 30, 2021? Price of XYZ stock:
On June 1, 2021, Crafton Corp. purchased a call option on shares of XYZ stock. The contract was for 100 shares at a strike price of $130 per share, with an expiration date of August 31, 2021. The option contract premium was $40. On June 30, a market appraisal estimated the time value of the option to be $30. Crafton settled the option contract on August 10. Prices of XYZ stock during the option period are provided below. June 1 $130 June 30 $134 August 10 $139 What was the intrinsic value of the call option contract as of June 30, 2021? Price of XYZ stock:
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
7
Transcribed Image Text:On June 1, 2021, Crafton Corp. purchased a call option on shares of XYZ stock. The contract was for 100 shares at a strike price of
$130 per share, with an expiration date of August 31, 2021. The option contract premium was $40. On June 30, a market appraisal
estimated the time value of the option to be $30.
Crafton settled the option contract on August 10. Prices of XYZ stock during the option period are provided below.
June 30
$134
June 1
$130
August 10
$139
What was the intrinsic value of the call option contract as of June 30, 2021?
Price of XYZ stock:
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education