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but you You want to capture a stock's potential growth in value between now and 30 days from now, don't have the funds to purchase
but you You want to capture a stock's potential growth in value between now and 30 days from now, don't have the funds to purchase 100 shares of the stock outright, so you instead choose to purchase three call options representing 100 shares of that stock each, with 60 days until expiration. The stock is currently valued at $53.40 per share, and the cost of one call option, with a strike price of $53.40, is $350. a What price must the stock hit before you breakeven on your purchase? Answer: $56.90 per share It's now 30 days until expiration and the stock is priced at $59.10 per share. Each option is now worth $680. What portion of this is the option's intrinsic value and what portion is its time premium? Answer: IV=$570, TP=$110 It's the last day before expiration and the stock is valued at $57.75 per share. What is your final net payoff? Answer: $255
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