Question
X Stock is currently trading for $32.80. If its January $35.00 strike call option has a $1.50 premium and you want to sell 5 contracts,
X Stock is currently trading for $32.80. If its January $35.00 strike call option has a $1.50 premium and you want to sell 5 contracts, briefly explain what that entitles or potentially requires you to do. Is the contract in or out-of-the-money? Also, what would your dollar maximum gain, maximum loss, and break-even price (market price) be with this strategy (assume you dont own HDSand you hold the contract to expiration)? Last, briefly explain why this $1.50 premium is relative low when compared to another stock in same industry that has a January call option ~ $3 out-of-the-money selling at a $2.80 premium.
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