Question
On April 1, 2020, Gamma Corp. purchases a call option for $ 500, which gives Gamma the right to buy 1,000 shares of Delta Inc.
On April 1, 2020, Gamma Corp. purchases a call option for $ 500, which gives Gamma the right to buy 1,000 shares of Delta Inc. for $ 30 each until December 1, 2020. Delta Inc. shares are currently trading for $ 30. At June 30, 2020, the options are trading at $ 4,800 and the shares at $ 32 each. At December 1, 2020, the options expire with no value. The entry to record the purchase of the call option is?
| a. No entry required. | ||
| b. Cash ....................................................................................................... 500 DerivativesFinancial Assets...................................................... 500
| ||
| c. DerivativesFinancial Assets................................................................ 500 Cash............................................................................................... 500
| ||
| d. FV-NI Investments................................................................................. 500 Cash............................................................................................... 500 |
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