Answer:
a) $ 495
b) $ 530
c) $ 30
d) $ 70
Explanation:
Given:
Stock price = $ 495
Strike prize = $ 530
a) The maximum possible price of a call option on Amazon is the stock price,
thus, the answer is $ 495
b) the maximum possible price of a put option on Amazon is the strike prize, thus, the answer is $ 530
c) given:
strike price = $ 465
now,
Minimum possible value of call option is given as :
⇒ Stock price- strike price
on substituting the values, we get
⇒ $ 495 - $ 465
or
⇒ $ 30
thus,
answer is $ 30
d) Given:
strike price = $ 565
Minimum possible value of an american put option on amazon stock is calculated as:
⇒ Strike price- stock price
on substituting the values, we get
⇒ $ 565 - $ 495
or
= $ 70
hence, the answer is $ 70
