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Suppose that March call option in a stock with a strike price of $50 costs $2.50 and is held until March. Under what circumstances will
Suppose that March call option in a stock with a strike price of $50 costs $2.50 and is held until March. Under what circumstances will the holder of the option make a gain? Under what circumstances will the option be exercised? Draw a diagram showing how the profit on a long position in the options depends on the stock price at the maturity of the option.
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