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My birthday is exactly 6 months from now. My parents have already announced that they will give me a cash gift of $50 on my
My birthday is exactly 6 months from now. My parents have already announced that they will give me a cash gift of $50 on my birthday. I want to use this cash to buy 10 stocks of Crickley Co. The current price of a Crickley stock is $5 but I don't know what the price will be 6 months from now. My professor advises me to look into European options to make sure I protect myself against the price risk. I conclude that I need to buy a call option (did you conclude the same?). Based on the advice of my professor, I collect the risk free rate (1%) and the expected volatility of the stock (20%) and compute the fair price for a call option. How much do I need to pay today to buy options for 10 Crickley stocks
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