Prices of Calls and Puts Options the shares of Marks & Spencer
a) Explain carefully why the November calls are trading at higher prices than the September calls.
b) Draw a diagram illustrating a straddle, using calls and puts expiring in November and an exercise price of 210. Explain the circumstances in which an investor might consider it worthwhile to invest in a straddle.
c) Develop a covered call using the data provided and comment on the nature of the payoffs produced and the potential uses of the strategy.