Answered step by step
Verified Expert Solution
Question
1 Approved Answer
You are bullish on Amazon and want to compare 3-month strategies of buying stock to buying call options. Currently Amazon stock is priced S0 =
You are bullish on Amazon and want to compare 3-month strategies of buying stock to buying call options. Currently Amazon stock is priced S0 = 2900, and 3-month call options with K=3000 cost c0 = 29 (per share). You have $2.9M to invest, so you can buy 1000 shares or go long calls on 100,000 shares. i] How much does AMZN need to increase over the 3-month period so that the calls are the better investment? ii] What is the risk of calls versus shares?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started