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You have $5,000 to invest. You are considering two investment options. You can buy a stock that trades for $50 a share. You can buy

You have $5,000 to invest.

You are considering two investment options.

  1. You can buy a stock that trades for $50 a share.
  2. You can buy call options on that same stock for $1.25 with a strike price of $55.

Either way, you will invest all $5,000.

Use the information above to answer the following questions:

What is your percent return if you invest $5,000 in the call option and the stock price at expiration is

$45? $50? $55? $60? $70?

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