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Goelgos share price is currently 1,000. Suppose you know that, on the third Friday of next month (expiration date), the price will be USD1,250 for
Goelgos share price is currently 1,000. Suppose you know that, on the third Friday of next month (expiration date), the price will be USD1,250 for sure (you have private information). Assume there is no margin requirements when writing options. If you only have USD2,000 currently available, which of the following will provide you with the highest profit at the expiration date?
- Shorting at-the-money put options whose underlying is Goelgo.
- Buying Goelgo shares.
- Buying at-the-money put options whose underlying is Goelgo
- Buying at-the-money call options whose underlying is Goelgo.
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