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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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