An option contract gives its buyer the right to either buy or sell an underlying asset at a specific price on a specified date Consider the following situations and explain what the investor described in each situation should do when the option contract expires Mike purchases a call option on Google Inc stock at strike price of $1,750 per share At expiration, the market price of Google stock is $1,900 per share Ike purchases a call option on Google Inc stock at strike price of $1,750 per share At expiration, the market price of Google stock is $1,500 per share Andrew sells a call option on Google Inc stock at strike price of $1,750 per share At expiration, the market price of Google stock is $1,800 per share Alice purchases a put option on Google Inc stock at strike price of $1,750 per share At expiration, the market price of Google stock is $1,900 per share Emma purchases a put option on Google Inc stock at strike price of $1,750 per share At expiration, the market price of Google stock is $1,500 per share Jane sells a put option on Google Inc stock at strike price of $1,750 per share At expiration, the market price of Google stock is $1,800 per share

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Posted on Jul 10, 2024

An option contract gives its buyer the right to either buy or sell an underlying asset at a specific price on a specified date.

Consider the following situations and explain what the investor described in each situation should do when the option contract expires.

Mike purchases a call option on Google Inc. stock at strike price of $1,750 per share. At expiration, the market price of Google stock is $1,900 per share.
Ike purchases a call option on Google Inc. stock at strike price of $1,750 per share. At expiration, the market price of Google stock is $1,500 per share.
Andrew sells a call option on Google Inc. stock at strike price of $1,750 per share. At expiration, the market price of Google stock is $1,800 per share.
Alice purchases a put option on Google Inc. stock at strike price of $1,750 per share. At expiration, the market price of Google stock is $1,900 per share.
Emma purchases a put option on Google Inc. stock at strike price of $1,750 per share. At expiration, the market price of Google stock is $1,500 per share.
Jane sells a put option on Google Inc. stock at strike price of $1,750 per share. At expiration, the market price of Google stock is $1,800 per share.