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Fin 321 – Fall 2016 – Homework 3 The intrinsic value of a CALL option: Max (S-X, 0) = Max (77-70,0) = $7 per share.Net profit for LONG CALL is [Max (S-X,0)-Premium]*100 shares*# of contracts = [Max(77-70,0)-4]*100*11 = $3,300.The intrinsic value of a PUT option: Max (X-S,0) = max (40-34,0)=$6 per share.Net profit for LONG.
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Alex Sanders PointCompany Net ProfitIntrinsic Value Of A Call OptionMaximum Gain