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An investor sells a European call on a share for $4. The stock price is $47 and the strike price is $50. Under what circumstances
An investor sells a European call on a share for $4. The stock price is $47 and the strike price is $50. Under what circumstances does the investor make a profit? Under what circumstances will the option be exercised? Explain how investors profit, according to the variation of the stock price at the maturity of the option. (You can explain by writing a simple formula of the profit, where X is the stock price at maturity.
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