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One share of Tesla, Inc. (NasdaqGS: TSLA) currently sells at $235.45. Suppose you buy a call option contract (worth 100 shares) that expires in two
- One share of Tesla, Inc. (NasdaqGS: TSLA) currently sells at $235.45. Suppose you buy a call option contract (worth 100 shares) that expires in two weeks. Your option's strike price is $240 and requires a premium of $3.90.
- Is this option currently in- or out-of the money?
- Suppose that one week from now, Teslas stock price has fallen to 225.45. Has your option increased or decreased in value? Explain.
- Suppose that one week from now, Teslas stock price has increased to $244.50, and its premium has risen to $5.75.
- What is your profit if you would sell the option contract at this time?
- What is your profit if you would exercise the option instead?
- In at least one paragraph, explain the tradeoffs between continuing to hold the option, selling it now, or exercising it. Which option should clearly be not (or be) taken here?
- What is the breakeven point of your option?
- What is your profit if you would sell the option contract at this time?
- What is your profit if you would exercise the option instead?
- In at least one paragraph, explain the tradeoffs between continuing to hold the option, selling it now, or exercising it. Which option should clearly be not (or be) taken here?
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Investments
Authors: William F. Sharpe, Gordon J. Alexander, Jeffery V. Bailey
6th Edition
8120321014, 978-8120321014
