Topic: Option Pricing When computing, please do not round off. Only final answers must be rounded off to two decimal places Based on the Black-Scholes model, the price of a put option should be P2,800. If the underlying asset has a strike price of P60,000 and a market price of P58,500, how much is the extrinsic value of the option?

A trader creates a long butterfly spread from call options with strike prices $60, $65, and $70 by trading a total of 400 options. The call options are worth $11, $14, and $18. What is the maximum net loss (after the cost of the options is taken into account)? Select one alternative: O $300 O $100 O $400 O $200

Use the binomal option pricing model to estimate the Call price.               Stock price (S)  $120.00            Stock price up (Su)  $170.00            Stock price down (Sd)  $50.00            Strike price (K)  $120.00            rf 1.0%                                       Call price up (Cu)             Call price down (Cd)                           D             PV(B)                           Call price (C)

Below is a chart with profit/loss on the vertical axis, and the $/£ exchange rate on the horizontal axis.  The solid line shows the profit/loss schedule for a:     Question 8 options:   put option in isolation (e.g. used for speculating that the pound will depreciate)   None of the above   covered call option (a call option is used as a hedge)   covered put option (a put option is used as a hedge)