Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You purchase a call option for $6.48 with 20 weeks to expiration on a stock you expect to increase 40.00%. The strike price of the

image text in transcribed
You purchase a call option for $6.48 with 20 weeks to expiration on a stock you expect to increase 40.00%. The strike price of the option is $67.50 The stock is currently priced at $67.50. Its standard deviation is 36.00% It pays a 0.00% dividend. The risk-free rate is 4.00% If the stock rises exactly as you expect, but it takes 10 weeks, what is the gain on your options trade as a percent (or decimal)? Use these values as a part of your calc's: N(d1)N(d2)0.988060.98218 339.46% 309.34% 362.74% 325.62% 378.37%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Financial Intelligence For HR Professionals

Authors: Karen Berman, Joe Knight, John Case

1st Edition

1422119130, 978-1422119136

More Books

Students also viewed these Finance questions