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You have $50,000 to invest. You want to either invest it all in one stock, or in options. The stock of the company you are
You have $50,000 to invest. You want to either invest it all in one stock, or in options. The stock of the company you are considering- Khai Co.- is currently selling for $20 per share. There is also a call option available for Khais stock with a $20 strike price and six months to maturity. The premium is $5. Khai pays no dividends. What is your annualized return from these two investments if, in six months, Khai is selling for $26 per share? What about $16 per share?
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