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A speculator can choose between buying 100 shares of Twitter stock for $40 per share and buying 1,000 European call options on Twitter with a

A speculator can choose between buying 100 shares of Twitter stock for $40 per share and buying 1,000 European call options on Twitter with a strike price of $45 for $4 per option.

Stock Price

Option Price

Number Bought

Strike Price

Twitter Stock

$40

100

European Call Options

$4

10

$45

In order to give a better outcome at the option maturity, the stock price must be above what price?

If Twitter stock rose to $45 per share, but the European call options remained stagnant, which purchase would you recommend to maximize profits?

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