i) Differentiate between “in the money”, “out the money” and “at the money” positions in a put option. Provide the example with the illustration.
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- i) Differentiate between “in the money”, “out the money” and “at the money” positions in a put option. Provide the example with the illustration.
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- Describe Option-Pricing Theory.a. Explain the covered call options strategy b. Graphically show a covered call options strategy, including payoff. Explain why an investor mayuse this option strategy.c. Using put-call parity, explain the shape of the payoff line (in part (a) of this question). Whatoption position does it look like and why?Calculate the price of call option and put option.
- Q. Discuss the factors that affect an option’s price?1. The option is currentlyA. In-the-moneyB. At-the-moneyC. Out-the-money 2. Determine the In/At/Out- the money by _____3, Determine the Intrinsic Value1. The option is currently A. In-the-moneyB. At-the-moneyC. Out-the-money 2. Determine the In/At/Out- the money by _____ 3. Determine the Intrinsic Value