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Suppose the price of Apples common shares is $180/share. The call option contract (involves 100 shares) on Apple, with a strike price of $195/share is
Suppose the price of Apples common shares is $180/share. The call option contract (involves 100 shares) on Apple, with a strike price of $195/share is $10/contract. With the $180 you have, you are looking at two choices: A: Buy one share of Apples common stock B: Buy 18 call option contracts (1) What are the rates of return on A and B if the share price has dropped to $170/share? (2) What are the rates of return on A and B if the share price has increased to $200/share?
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