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The current price of a stock is $150, and three-month European call options with a strike price of $155 currently sell for $5.00. An investor
The current price of a stock is $150, and three-month European call options with a strike price of $155 currently sell for $5.00. An investor who feels that the price of the stock will increase is trying to decide between buying 100 shares and buying 3,000 call options. Both strategies involve an investment of $15,000.
- If the share price increases to $162, the gain to the investor if he bought call options will be?
- If the share price increases to $162, the gain to the investor if he bought shares will be
- It is therefore advisable for the investor to buy which between call options/sharesin order to benefit from an increase in share price?
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