Question
You bought two stock call option contracts with the strike price of $54.7. The option premium per contract was $3.5 and the spot price was
You bought two stock call option contracts with the strike price of $54.7. The option premium per contract was $3.5 and the spot price was $56 when you entered into the option contracts. The contract size per contract is 100. Now the spot price increased to $57.0 and the call option price increased to $4.65. Upon these price changes, you decided to exercise the options.
Compute the rate of return on the options.
( Remember ROR = $NetProfit/$Cost )
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To calculate the rate of return on the options we first need to determine the net profit and the cos...
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Step: 2
Step: 3
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Financial Reporting And Analysis
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer
8th Edition
1260247848, 978-1260247848
