Circular File Stock Is Selling for $25 a Share

question 13

Essay

Circular File stock is selling for $25 a share.You see that call options on the stock with exercise price of $20 are selling at $3.What should you do? What will happen to the option price as investors identify this opportunity? Then you observe that put options on Circular File with exercise price $30 are selling for $4.What should you do?

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Definitions:

Binocular Disparity

The difference in the images on the left and right retinas, which is the basis for depth perception and three-dimensional vision.

Motion Parallax

A depth cue that involves images of objects at different distances moving across the retina at different rates.

Apparent Movement

The perception of movement in a stationary object due to rapid sequential presentation of images or due to the context in which the object is viewed.

Visual Field

The total area in which objects can be seen in the peripheral vision while the eye focuses on a central point.