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On April 1, 2021, Beta Corp. purchases a call option for $500, which gives Beta the right to buy 1,000 shares of ABC Inc. for
On April 1, 2021, Beta Corp. purchases a call option for $500, which gives Beta the right to buy 1,000 shares of ABC Inc. for $30 each until December 1, 2021. ABC Inc. shares are currently trading for $30. On June 30, 2021, the options are trading at $4,800 and the shares at $32 each. On December 1, 2021, the options expire with no value.
On December 1, 2021, Beta's entry would be:
a. No entry required
b. Loss 2,000 Derivatives-Financial Assets 2,000
c. Loss 4,300 Derivatives Financial Assets 4,300
d. Loss 4,800 Derivatives Financial Assets 4,800
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