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On January 2, 2020, Flounder Company purchases a call option for $330 on Merchant common stock. The call option gives Flounder the option to buy
On January 2, 2020, Flounder Company purchases a call option for $330 on Merchant common stock. The call option gives Flounder the option to buy 1,020 shares of Merchant at a strike price of $54 per share. The market price of a Merchant share is $54 on January 2, 2020 (the intrinsic value is therefore $0). On March 31, 2020, the market price for Merchant stock is $57 per share, and the time value of the option is $190.
What was the effect on net income of entering into the derivative transaction for the period January 2 to March 31, 2020?
Unrealized Holding Gain = | $________ |
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