Extrinsic Value: Look at the following chart. Rank the options in order of expiry, from nearest to farthest. UNDERLYING UNDERLYING STRIKE/ OPTION INTRINSIC EXTRINSIC
PRICE TYPE PRICE VALUE VALUE
A SPY $278.68 280 call $11.70
B SPY $278.68 280 call $14.69
C SPY $278.68 280 put $12.39
D SPY $278.68 280 call $27.44
E SPY $278.68 280 put $8.73
F SPY $278.68 280 put $14.83
G SPY $278.68 280 call $4.14
1. Theta: An option has a theta of -.08. If it has a price of $2.58 today, what will its price be tomorrow, all else being the same? Explain.
2. Theta: Option A has a theta of -.10 and Option B has a theta of -.05. Which option is expiring first? Explain.
3. Theta: Look at the following chart. Rank the options in order of expiry, from nearest to farthest.
UNDERLYING UNDERLYING STRIKE/ OPTION
PRICE TYPE PRICE Theta
A SPY $278.68 280 call $11.70 -.07
B SPY $278.68 280 call $14.69 -.02
C SPY $278.68 280 put $12.39 -.03
D SPY $278.68 280 call $27.44 -.02
E SPY $278.68 280 put $8.73 -.04
F SPY $278.68 280 put $14.83 -.03
G SPY $278.68 280 call $4.14 -.02