What dates can the option be exercised


Problem 1. A call option on Futura Corporation stock currently trades for $4. The expiration date is February 18 of next year. The exercise price of the option is $45.

a. If this is an American option, on what dates can the option be exercised?

b. If this is a European option, on what dates can the option be exercised?

c. Suppose the current price of Futura Corporation stock is $35. Is this option worthless?

Problem 2. The strike price of a call option on Simpsons Entertainment common stock is $50.

a. What is the payoff at expiration of this call if, on the expiration date, Simpsons stock sells for $55?

b. What is the payoff at expiration of this call if, on the expiration date, Simpsons stock sells for $45?

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Finance Basics: What dates can the option be exercised
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