Homework Answers
Profit or loss per share of stock to investor
Answer: Loss of $3 per share (i.e. price of the call option)
Call option gives the holder a right to purchase the underlying asset at exercise price on maturity (expiration)
Call option is exercised when market price is more than exercise price.
Market price on expiration = $120
Exercise Price = $130
Since in this case market price on expiration is less than Exercise price, Call option holder will not exercise his option. So he will have a loss of $3 which he paid to purchase the Call option.
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Refer to the stock options on Apple in the Figure 2.10. Suppose
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Yes
No
a-2. What is the net profit/loss on your
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Refer to the stock options on Apple in the Figure 2.10. Suppose
you buy a September expiration call option on 100 shares with
exercise price $100.
a-1. If the stock price in September is $102,
will you exercise your call?
Yes
No
a-2. What is the net profit/loss on your
position? (Negative value should be
indicated by a minus sign.)
(Click to select)Net Profit/ Net
Loss $
a-3. What is the rate of return on your
position? (Round your answer...
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