ABC,which Closed at $151,has Call Options Trading in April,July,and October

question 25

Essay

ABC,which closed at $151,has call options trading in April,July,and October with the following values:
$$\begin{array} { l l l l c } & & & \text {---- Calls----- } \\\text { Options/Strike } & \text { April } & \text { July } & \text { October } \\\mathrm { ABC } \quad\quad140 & 11 ^ { 1 / 4 } & 11 ^ { 3 / 4 } & 13 \\151\quad\quad\quad 150 & 11 / 2 & 3 & 4 \\151 \quad\quad\quad160 & 3 / 4 & 11 / 2 & 2\end{array}$$ (a)Calculate the intrinsic value of the April 150 call.
(b)Calculate the intrinsic value of the April 140 call.
(c)Should the price of ABC rise to $156,what is the minimum value that the April 150 call should trade at?

---

Definitions:

Dependency Theory

A socioeconomic theory suggesting that resources flow from poor, underdeveloped states to wealthy states, enriching the latter at the expense of the former.

World Systems Theory

A socio-economic theory that suggests the world is divided into core, semi-peripheral, and peripheral countries, with wealth and power concentrated in the core.

Commodity Chain

The network of production and labor processes by which a product becomes a finished commodity. By following the commodity chain, it is evident which countries gain profits and which ones are being exploited.

Division of Labor

The allocation of different tasks to different people or groups in a society, contributing to economic efficiency and specialization.