Some of the quotes below are clearly mispriced. In fact, there are at least 6 qu

Question

Some of the quotes below are clearly mispriced. In fact, there are at least 6 quotes that violate various price behaviors of options. Identify the mispriced options by their nature (call or put), their strike price, and the expiration month and then state which relationship/pricing rule is being violated.

Calls

Puts

Option and NY Close

Exercise/

Strike

Expiration

Vol.

Last

Vol.

Last

Price

GM

5

Nov

89

1.12

41

0.15

6.8

5

Dec

85

1.15

22

0.1

6.8

8

Nov

5

1.15

41

1.1

6.8

8

Feb

60

0.45

55

1.2

Calls

Puts

Option and NY Close

Exercise/

Strike

Expiration

Vol.

Last

Vol.

Last

Price

GM

5

Nov

89

1.12

41

0.15

6.8

5

Dec

85

1.15

22

0.1

6.8

8

Nov

5

1.15

41

1.1

6.8

8

Feb

60

0.45

55

1.2

Explanation / Answer

GM is given as Price which is not correct as per market convention and there is no relationship between Vol. of Call and Put Option.

OPTION Strike Price Expiration Market Price GM 5 Nov. 6.8 5 Dec. 6.8 8 Nov. 6.8 8 Feb.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.