Use the table for the question(s) below.
Consider the following information on options from the CBOE for Merck:
-Assume you want to buy one options contract that with an exercise price closest to being at-the-money and that expires January 2009. The current price that you would have to pay for such a contract is ________.
A) $680
B) $380
C) $650
D) $420

Question

Use the table for the question(s) below.
Consider the following information on options from the CBOE for Merck: 
-Assume you want to buy one options contract that with an exercise price closest to being at-the-money and that expires January 2009. The current price that you would have to pay for such a contract is ________.
A) $680 
B) $380 
C) $650 
D) $420

Quizplus · Accepted Answer

A) One contract is for 100 shares. The option closest to being at-the-money has an exercise price of $40.00 and currently has an ask price of $6.80. Since you are buying the option, you will have to pay the ask price. So $6.80 × 100 shares per contract = $680.

Use the Table for the Question(s) Below