Question

IBM (INTL BUSINESS MACHINES) Sep 13 2012 @ 16:18 ET Calls Last Net Bid Sale 206.36 2.59 Vol 3879539 Ask 206.30 Size 1 X 1 Ask Bid 205.29 Vol Open Puts Int Last Net Bid Ask Vol Sale Int 12 Sep 200.00 (IBM12221200-E) 6.26 12 Sep 205.00 (IBM12221205-E) 2.35 12 Sep 210.00 (IBM12221210-E) 0.32 12 Sep 215.00 (IBM12221215-E) 0.06 12 Oct 200.00 (IBM1220J200-E) 8.20 12 Oct 205.00 (IBM1220J205-E) 4.85 12 Oct 210.00 (IBM1220J210-E) 2.36 12 Oct 215.00 (IBM1220J215-E) 1.11 1.96 1.14 0.15 0.03 1.53 1.05 0.58 0.36 6.45 2.36 0.36 0.04 8.30 4.90 2.45 1.04 6.65 193 2.49 1800 0.42 508 0.08 36 8.45 242 5.00 382 2.54 186 1.10 115 6898 12 Sep 200.00 (IBM12220200-E) 0.23 -0.42 0.19 7390 12 Sep 205.00 (IBM1222U205-E) 1.10-1.35 1.03 2818 12 Sep 210.00 (IBM12220210-E) 4.15 -2.50 3.95 1010 12 Sep 215.00 (IBM12220215-E) 18.20 pc 8.60 5786 12 Oct 200.00 (IBM1220V200-E) 2.04 -0.88 1.98 8141 12 Oct 205.00 (IBM1220V205-E) 3.50 -1.31 3.55 7074 12 Oct 210.00 (IBM12201210-E) 6.37 -1.54 6.05 3983 12 Oct 215.00 (IBM1220V215-E) 10.80 -9.90 9.65 0.22 1.10 4.15 8.95 2.05 3.65 6.20 9.75 946 592 118 0 150 211 35 5 3351 1184 625 3 6 2646 1335 1234 238 Source: Chicago Board Options Exchange at www.cboe.com.

1. The attached chart for this question is an option quote on IBM from the CBOE website.

a. Which option contract had the most trades​ today?

b. Which option contract is being held the most​ overall?

c. Suppose you purchase one option contract with symbol​ IBM1222I210-E. How much will you need to pay your broker for the option contract​ (ignoring commissions)?

d. Suppose you sell one option contract with symbol​ IBM1222I210-E. How much will you receive for the option contract​ (ignoring commissions)?

e. The calls with which strike prices are currently​ in-the-money? Which puts are​ in-the-money?

A. 12 Oct 200.00 put

B. 12 Sep 200.00 put

C. 12 Sep 205.00 call

D. 12 Oct 205.00 call

Answer 1

Answer:

(a) A call Option with an expiry on 12th Sep with strike price 205 (12 Sep 205.00 IBM 1222I205-E) had the most trade today with a volume of 1800.

(b) A call option with an expiry on 12th Oct with strike price 205 (12 OCt 205.00 IBM 1220J205-E) is being held overall woth highest open interest (Outstanding positions).

(c) $ 0.42 (This call option of 12th Sep strike price 210, can be purchased at best ask price)

(d) $ 0.36 ( This call option of 12th sep strike price 201, can be sold at best bid price)

(e) Spot Price = $206.36

A. 12 Oct 200.00 put - Out of the money    (Strike<Spot)

B. 12 Sep 200.00 put - Out of the money    (Strike < Spot)

C. 12 Sep 205.00 call   - In the money        (Strike < Spot)

D. 12 Oct 205.00 call   - In the money         (Strike < Spot)

Important : All Call of strike price $ 200 and $ 205 will be in the money. Remaining all of strike price greater than 206.36 will be OTM Call.

All Put options of strike price $ 210, $ 215 will be in the money. Remaining Put (200, 205) of strike price lower than 206.36 will be OTM Put.