Suppose you buy 50 April 100 call option contracts. How much will you pay, ignoring commissions? Calls
Question:
Calls Puts Strike Last Close Price Expiration Vol. Last Vol. Hendreeks 103 Feb 100 72 5.20 50 2.40 Mar 103 100 41 8.40 29 4.90 Apr 103 100 16 10.68 10 6.60 Jul 103 100 14.30 10.10
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50 contr...View the full answer
Fundamentals of Investments, Valuation and Management
ISBN: 978-1259720697
8th edition
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
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A call option is a type of financial contract that gives the holder the right, but not the obligation, to buy an underlying asset (such as a stock, commodity, or currency) at a specified price (called the strike price) within a specified period of time. When an investor purchases a call option, they are essentially betting that the price of the underlying asset will rise above the strike price before the option\'s expiration date. If the price of the asset does rise above the strike price, the investor can exercise the option by buying the asset at the strike price and then selling it at the higher market price, thereby earning a profit. Call options are often used as a speculative investment strategy, as they allow investors to potentially profit from the upward movement of an asset without having to actually own the asset itself. They are also commonly used as a hedging tool to protect against potential losses in a portfolio.
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