A three-month call option is the right to buy a stock at 20, Ask an Expert

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A three-month call option is the right to buy a stock at $20. Currently the stock is selling for $22 and the call is selling for five dollars. You are considering buying 100 shares of the stock ($2200) or one call option ($500).

A) the price of the stock rises to $29 within three months what would be the profits or losses on each position? What would be the percentage gains or losses?

B) if the price of the stock declines to $18 within three months, what would be the profits or losses on each position? What would be the percentage gains or losses?

C) if the price of the stock remains stable at $22, what would be the percentage gains or losses at the expiration of the call option?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92752048

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