Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

You are buying 5 contracts of a call option with an exercise (strike price) of $100. You pay $10 premium per share. You exercise this

You are buying 5 contracts of a call option with an exercise (strike price) of $100. You pay $10 premium per share. You exercise this option after three months when the stock price reaches at $130. The annualized rate of return in this trade is:

a. 10%

b. 100%

c. 400%

d. None of the above. My answer is ....................

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Corporate Finance

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford, David A. Stangeland, Andras Marosi

1st canadian edition

978-0133400694

Students also viewed these Finance questions