Stock XYZ is $48. You have discovered information that you believe very few other people know that makes you think that XYZ will soon announce a new product that will revolutionize the treatment of all forms of cancer. You want to leverage your idea that the stock price will increase sharply and do so quickly. Which of the following factors is most likely to cause you to buy the $55-strike calls rather than the $50-strike calls? Both calls expire in two months. There is one correct answer.

Check All That Apply

• Interest rates are relatively low.

  Interest rates are relatively low.

• The implied volatility of both calls is historically low. The implied volatility of both calls is historically low.

• When you want to maximize your leverage.

  When you want to maximize your leverage.

• You are unsure of the stock direction and you want the call position to be worth something.

  You are unsure of the stock direction and you want the call position to be worth something.

• There is no dividend in the next two months.