Question
Claire purchased a call and put option on 100 shares of Cisco for US$1 per share at a strike price of US$20. Before Cisco announced
Claire purchased a call and put option on 100 shares of Cisco for US$1 per share at a strike price of US$20. Before Cisco announced its full-year earnings results, Cisco was trading at a price of US$20 per share.
Calculate Claire's NET gain/loss when Cisco's earnings beat market expectations and its stock price rose to USD$25 per share.
- A. Gain of US$500
- B. Gain of US$300
- C. Loss of US$200
- D. Loss of US$100
How to get answer B?
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Financial Modeling
Authors: Simon Benninga
4th Edition
0262027283, 9780262027281
