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An investor purchased a call optuon that allows her to putchase 100 shares of Dell Computer...

An investor purchased a call optuon that allows her to putchase 100 shares of Dell Computer common stick for $45 per share any time during the next six months. The price she paid for the options was $2.50 or $250 total and the current matjet price of Dells stock is $42.50. if the price of Dell increases to $50 and the investor decides to exercise it whst will be the gain or loss that resukts from the option position that was held? ignore taxes and commissions.

the options are $250gain $750 gain $250 loss None of the above or $500 gain

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Answer #1

Call option is the right to buy a specified security at a specified price on a future date

Profit = (Market price on maturity- strike price- premium paid)*number of shares

=(50-45-2.50)*100

=$250 gain

Hence, the answer is $250 gain

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