Use the table for the question(s) below.
Consider the following information on options from the CBOE for Rackspace.

-Assume you want to buy five call option contracts that with an exercise price closest to being at-the-money and that expires December 2010. The current price that you would have to pay for such a contract is ________.
A) $550
B) $110
C) $475
D) $300

Question

Use the table for the question(s) below.
Consider the following information on options from the CBOE for Rackspace.
 
-Assume you want to buy five call option contracts that with an exercise price closest to being at-the-money and that expires December 2010. The current price that you would have to pay for such a contract is ________.
A) $550 
B) $110 
C) $475 
D) $300

Quizplus · Accepted Answer

A) One contract is for 100 shares. The option closest to being at-the-money has an exercise price of $30.00 and currently has an ask price of $1.10. Since you are buying the option, you will have to pay the ask price. So 5 × $1.10 × 100 shares per contract = $550.

Use the Table for the Question(s) Below