Asked by Caleigh Noelle on May 06, 2024
Verified
The following price quotations on WFM were taken from the Wall Street Journal. Stock Price Strike February Price 927/88587/8927/89041/8927/89515/8\begin{array}{rrr}\text { Stock Price}&\text { Strike }&\text { February }\\&\text { Price }&\\927 / 8 & 85 & 87 / 8 \\927 / 8 & 90 & 41 / 8 \\927 / 8 & 95 & 15 / 8\end{array} Stock Price927/8927/8927/8 Strike Price 859095 February 87/841/815/8
The premium on one WFM February 85 call contract is
A) $8.875.
B) $887.50.
C) $412.50.
D) $158.00.
Premium
The amount by which the price of a financial instrument or asset exceeds its face value or the cost above the normal or standard rate.
Stock Price
The cost of purchasing a share of a company in the stock market, which fluctuates based on supply and demand dynamics.
- Identify and evaluate the factors influencing the premium of an option.
Verified Answer
VK
veerpal kaur bhullarMay 13, 2024
Final Answer :
B
Explanation :
The premium on one WFM February 85 call contract is given as 87/8, which is equal to 8.875. Since each standard option contract represents 100 shares, the total cost of the contract is 8.875 * 100 = $887.50.
Learning Objectives
- Identify and evaluate the factors influencing the premium of an option.