Question

The following price quotations are for exchange-listed options on Primo Corporation common stock. Company Strike Expiration Call Put Primo 61.12 55 Feb 7.25 0.48 With transaction costs ignored, how much would a buyer have to pay for one call option contract. Assume each contract is for 100 shares.

Answer 1

Answer: $725

Explanation:

One call option is valued at $7.25.

We are to find the value of a Call Option contract which is assumed to have a 100 shares in it.

If therefore, 1 call option is $7.25, then 100 call options is,

= 7.25 * 100

= $725

A buyer would have to pay $725 for one call option contract.

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