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    Handout 7

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    Delisha
    This document provides questions about option concepts related to ANZ call and put options. It asks the reader to use diagrams to explain why certain options had specific fair values on February 1st, 2012 based on their exercise prices and expiration dates. It also asks the reader to compare fair values of specific ANZ options quoted on January 5th versus February 1st.

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    Handout 7

    Uploaded by

    Delisha
    166 views2 pages
    This document provides questions about option concepts related to ANZ call and put options. It asks the reader to use diagrams to explain why certain options had specific fair values on February 1st, 2012 based on their exercise prices and expiration dates. It also asks the reader to compare fair values of specific ANZ options quoted on January 5th versus February 1st.

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    This document provides questions about option concepts related to ANZ call and put options. It asks the reader to use diagrams to explain why certain options had specific fair values on February 1st, 2012 based on their exercise prices and expiration dates. It also asks the reader to compare fair values of specific ANZ options quoted on January 5th versus February 1st.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    166 views2 pages

    Handout 7

    Uploaded by

    Delisha
    This document provides questions about option concepts related to ANZ call and put options. It asks the reader to use diagrams to explain why certain options had specific fair values on February 1st, 2012 based on their exercise prices and expiration dates. It also asks the reader to compare fair values of specific ANZ options quoted on January 5th versus February 1st.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    Treasury Management - Hand-out Questions 7

    Basic Option Concepts

    Consider the following extracts from the Financial Review:


    Jan 5th, 20012 February 1st, 2012

    Use diagrams to assis your explanation of the following questions:


    1. Explain why ANZ call options expiring in March 2012 with exercise
    prices of $20.50 and $22.50 had ‘fair values’ of $1.24 and 17c
    respectively on February 1st, 2012.

    2. Explain why ANZ put options expiring in April 2012 with exercise
    prices of $17.00 and $20.50 had ‘fair values’ of 6c and 46c respectively
    on February 1st, 2012.

    3. Explain why ANZ call options with an exercise price of $21.50 expiring
    in February, March, April and June 2012 had ‘fair values’ of 23c, 56c,
    73c, and 93c respectively on February 1st, 2012.

    4. Compare the ‘fair values’for ANZ call options quoted on January 5th,
    2012 for February exercise with a $21.00 exercise price with the same
    options quoted on February 1st, 2012.

    5. Compare the ‘fair values’for ANZ put options quoted on January 5th,
    2012 for March expiry with a $21.00 exercise price with the same options
    quoted on February 1st, 2012.

    _____________________________________

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