Question
A six-month call option is the right to buy stock at $25. Currently, the stock is selling for $28 and the call is selling for
A six-month call option is the right to buy stock at $25. Currently, the stock is selling for $28 and the call is selling for $3.20.
a) If the price of the stock rises to $35 within six months, what would be the profits or losses on each position? What would be the percentage gains or losses?
b) If the price of the stock declines to $15 within six months, what would be the profits or losses on each position? What would be the percentage gains or losses?
c)If the price of the stock remained stable at $28, what would be the percentage gains or losses at the expiration of the call option?
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