Suppose that a stock price is currently $20 and that a call option with an exercise price

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Suppose that a stock price is currently $20 and that a call option with an exercise price of $25 is created synthetically using a continually changing position in the stock. Consider the following two scenarios:

a. Stock price increases steadily from $20 to $35 during the life of the option

b. Stock price oscillates wildly, ending up at $35 Which scenario would make the synthetically created option more expensive? Explain your answer.

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Options Futures And Other Derivatives

ISBN: 9780130090560

5th Edition

Authors: John C. Hull

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Question Posted: Oct 18, 2024 07:02 AM

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Suppose that a stock price is currently $20 and that a call option with an exercise price

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Options Futures And Other Derivatives

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