Refer to the stock options on Microsoft in the Figure 2.10. Suppose you buy a November expiration call option on 200 shares with the excise price of $135.

Required:

a-1. If the stock price at option expiration is $142, will you exercise your call?

multiple choice 1

Yes

No

a-2. What is the net profit/loss on your position?

FIGURE 2.10 Stock options on Microsoft, September 4, 2019 Note: Microsoft stock price on this day was $137.49. Source: Compiled from data downloaded from Yahoo! Finance