Question
An American Call option expiring 6 months from now on a certain stock has a strike price of $100 and the premium paid for the
An American Call option expiring 6 months from now on a certain stock has a strike price of $100 and the premium paid for the call was $15. Today, the stock price rose to $120 per share. Please mark the only incorrect statement about the call option.
a. | If the investor were to exercise the call today, its profit would amount to $5 | |
b. | If the investor were to exercise the call today, its holding period return would be 33.3% | |
c. | Although the call is in the money, it may be more valuable for the investor not to exercise the call early | |
d. | It is always better for the holder of a call to exercise it as soon as it is in the money |
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