Question
Ted buys 10 CALL option contracts Each contract consists of 100 shares Exercise price $10.00 per share; Premium $0.75 per share; Spot price at expiry
Ted buys 10 CALL option contracts
Each contract consists of 100 shares
Exercise price $10.00 per share; Premium $0.75 per share; Spot price at expiry $12.00 per share.
a)How much does it cost to purchase the 10 contracts? (ignoring brokerage costs)
b) Assuming Ted exercises the options, how much will it cost to buy the underlying shares?
c) Calculate Ted's profit.
Step by Step Solution
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Step: 1
a Ted buys 10 option contracts and each contract consists of 100 shares so Ted is buying a total of ...
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Smith and Roberson Business Law
Authors: Richard A. Mann, Barry S. Roberts
15th Edition
1285141903, 1285141903, 9781285141909, 978-0538473637
