The current price of a stock is $94, and three-month European call options with a strike price
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The current price of a stock is $94, and three-month European call options with a strike price of $95 currently sell for S4.70. An investor who feels that the price of the stock will increase is trying to decide between buying 100 shares and buying 2,000 call options (20 contracts). Both strategies involve an investment of $9,400. What advice would you give?
How high does the stock price have to rise for the option strategy to be more profitable?
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