TABLE 8.1
Use the table to answer following question(s).
April 19, 2009, British Pound Option Prices (cents per pound, 62,500 pound contracts).
-Refer to Table 8.1. The May call option on pounds with a strike price of 1440 mean:
A)$88/£ per contract.
B)$0.88/£.
C)$0.0088/£.
D)none of the above

Question

TABLE 8.1
Use the table to answer following question(s).
April 19, 2009, British Pound Option Prices (cents per pound, 62,500 pound contracts). 
-Refer to Table 8.1. The May call option on pounds with a strike price of 1440 mean:
A)$88/£ per contract. 
B)$0.88/£. 
C)$0.0088/£. 
D)none of the above

Quizplus · Accepted Answer

The option premium is typically quoted in terms of the currency per unit. If the premium is $88 per contract and each contract is for 10,000 pounds, then the premium per pound is $88/10,000 = $0.0088/£.

TABLE 8.1 Use the Table to Answer Following Question(s)