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An investor currently holds an American call option on a stock XYZ. The option has 2 months to expiry. The current price of XYZ is

An investor currently holds an American call option on a stock XYZ. The option has 2 months to expiry. The current price of XYZ is $27, and the strick price is $20. The risk-free rate is 4%. The market price for the call option is $7.50. Discuss the possible courses of action available to the investor. Give pros and cons for each action.image text in transcribed

[5] An investor currently holds an American call option on a stock XYZ. The option has 2 months to expiry. The current price of XYZ is $27, and the strick price is $20. The risk-free rate is 4%. The market price for the call option is $7.50. Discuss the possible courses of action available to the investor. Give pros and cons for each action

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