Mr. Anderson just bought 100 call contracts on shares of ARC Resources Ltd. The options can...
Mr. Anderson just bought 100 call contracts on shares of ARC Resources Ltd. The options can be exercised in one month's time at the strike price of $26. The bid price on this option is $0.02 and the ask price is $0.09. The shares of the company are currently selling at $24.25 per share. If the company's share price rises to $27 in one month's time, what will be Mr. Anderson's net gain from the call options? (Assume that call contracts are bought and sold in round lots.)
$10,000
$900
$19,100
$9,100
$9,000
Homework Answers
Net gain from the call otpions=(MAX(spot price at expiry-strike
price,0)-ask price)*option contract size*number of
contracts=(MAX(27-26,0)-0.09)*100*100
=9100
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