Question
Richie owns 100 shares of General Electric (GE). Richie has owned the stock for 10 years. GE is currently trading at $24.00 per share. Richie
Richie owns 100 shares of General Electric (GE). Richie has owned the stock for 10 years. GE is currently trading at $24.00 per share. Richie wants a little extra money, so he writes (sells) a call option on GE with a strike price of $24.00. Richie charges a premium of $1.00. He assumes that GE shares drop to $18.00 per share at the end of the expiration period.
How much did Richie make or lose on this transaction (total)?
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Solution In this case Riche sells one call option with a ...
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Introduction to Financial Accounting
Authors: Charles Horngren, Gary Sundem, John Elliott, Donna Philbrick
11th edition
978-0133251111, 013325111X, 0133251039, 978-0133251036
