Question
1-month European call options for Apple (AAPL) with a strike price of $235/share sell for $1.50/share when Apple stock trades at $225/share. Each call contract
1-month European call options for Apple (AAPL) with a strike price of $235/share sell for $1.50/share when Apple stock trades at $225/share. Each call contract is for 100 shares of Apple stock.
a. If Apple share price at maturity ends up being $230/share what is the payoff and profit for the long call buyer?
b. If Apple share price at maturity ends up being $230/share what is the payoff and profit for the short call seller?
c. What is the profit break-even stock price for the long call buyer?
d. Draw a diagram showing the payoff and profit for the investor under different stock prices at maturity.
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Finance Applications And Theory
Authors: Marcia Cornett, Troy Adair, John Nofsinger
5th Edition
1260013987, 9781260013986
