The Standard & Poors Depositary Receipts (SPDRs) is an exchange-traded fund in the United States that is
Question:
The Standard & Poor’s Depositary Receipts (SPDRs) is an exchange-traded fund in the United States that is designed to track the S&P 500 stock market index. The current price of a share of SPDRs is \($113\). A trader has just bought call options on shares of SPDRs for a premium of \($3\) per share. The call options expire in five months and have an exercise price of \($120\) per share. On the expiration date, the trader will exercise the call options (ignore any transaction costs) if and only if the shares of SPDRs are trading:
A. Below \($120\) per share.
B. Above \($120\) per share.
C. Above \($123\) per share.
Step by Step Answer:
Investments Principles Of Portfolio And Equity Analysis
ISBN: 9780470915806
1st Edition
Authors: Michael McMillan, Jerald E. Pinto, Wendy L. Pirie, Gerhard Van De Venter, Lawrence E. Kochard