Purchase price $2.15
Exercised Price: $37.50
Currently Trading at $37.00
In order to make the decision on the best course of action, two tables of calculations are needed:
1) One table for calculations on:
a) The possible outcomes of buying a call option for $2.15, exercise price $37.50
b) Possible price ranges for the underlying stock: 25 30 35 40 45 50 55 60
2) A second table for calculations on:
a) The possible outcomes of buying a put option for $1.65, exercise price $37.50
b) Possible price ranges for the underlying stock: 25 30 35 40 45 50 55 60
Deliverables
1) A worksheet showing your calculations of the outcomes for the suggested stock price ranges for the call option buying strategy;
2) A worksheet showing your calculations of the outcomes for the suggested stock price ranges for the put option buying strategy.