The following price quotations on WFM were taken from the Wall Street Journal. $$\begin{array} { c c c }
& \text { Strike } & \
\text { Stock Price } & \text { Price } & \text { February } \
927 / 8 & 85 & 87 / 8 \
927 / 8 & 90 & 41 / 8 \
927 / 8 & 95 & 15 / 8 \
\hline
\end{array}$$ The premium on one WFM February 85 call contract is
A) $8.875.
B) $887.50.
C) $412.50.
D) $158.00.

Question

The following price quotations on WFM were taken from the Wall Street Journal. $$\begin{array} { c c c } 
& \text { Strike } & \
\text { Stock Price } & \text { Price } & \text { February } \
927 / 8 & 85 & 87 / 8 \
927 / 8 & 90 & 41 / 8 \
927 / 8 & 95 & 15 / 8 \
\hline
\end{array}$$ The premium on one WFM February 85 call contract is
A) $8.875.
B) $887.50.
C) $412.50.
D) $158.00.

Quizplus · Accepted Answer

The premium is calculated by multiplying the option price (87/8) by 100 (since each contract covers 100 shares). Thus, 87/8 = 8.875, and 8.875 * 100 = $887.50.

The Following Price Quotations on WFM Were Taken from the Wall