The current price of a stock is $47, and three-month call options with a strike price...

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The current price of a stock is $47, and three-month call options with a strike price of $50 currently sell for $4.70. An investor who feels that the price of the stock will increase is trying to decide between buying 100 shares and buying 1,000 call options (10 contracts). Both strategies involve an investment of $4,700. What will be the profit/loss from each strategy if a) the price rises to $60 b) Price goes down to $45? The current price of a stock is $47, and three-month call options with a strike price of $50 currently sell for $4.70. An investor who feels that the price of the stock will increase is trying to decide between buying 100 shares and buying 1,000 call options (10 contracts). Both strategies involve an investment of $4,700. What will be the profit/loss from each strategy if a) the price rises to $60 b) Price goes down to $45?

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Answer To solve this problem we need to calculate the profitloss for each strategy under the given p... View the full answer