Estimate the new price of the call option

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Reference no: EM132004539

Suppose you are considering selling a one year call options with a strike price of $80 for a stock that is currently trading at $75. The risk free interest rate is 4%.

The cost per option is $8.152, ? = 0.527, G = .018, and ? = -.016.

If the price of the stock were to move to $74.

A)Use the approximation to estimate the new price of the call option.

B) Use the - G approximation to estimate the new price of the call option.

Reference no: EM132004539

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