Stank's Steaks is a wildly successful franchise truckstop restaurant. Its stock is currently trading for $45...
Stank's Steaks is a wildly successful franchise truckstop restaurant. Its stock is currently trading for $45 per share. Stank's Steaks 12-month call options with a strike price of $50 are currently selling for $8.00 each. Suppose you purchase one of these options today and Stank's Steaks stock closes at $75.00 on the day your options expire a year from now. What will be the percent return on your investment in the call option?
Homework Answers
return = ((expiration price-strike price)/option price-1)*100
=((75-50)/8-1)*100=212.5%
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