On January 1, 2022, Mills Corp. purchased a call option on shares of XYZ stock. Terms of
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Question:
On January 1, 2022, Mills Corp. purchased a call option on shares of XYZ stock. Terms of the contract were as follows:
- Number of shares: 100
- Strike price: $160 per share
- Expiration date: April 30, 2022
- Total cost of the option contract: $120
- Seller of the option contract: First Investment Bank
On January 1, 2022, XYZ stock was trading at $160 per share.
The following additional information is known:
- On March 31, 2022, the price of XYZ stock was $180 per share. A market appraisal indicated that the time value of the option contract was $100.
- On April 5, 2022, the price of XYZ stock was $175 per share. A market appraisal indicated that the time value of the option contract was $90. On this date, Mills settled the option contract.
Required:
Indicate any amounts that Mills Corp. would have included in its March 2022 quarterly financial statements related to the option contract.
Expert Answer:
Solution quantenly Amount its March 2022 Impacting statements grelated to the o... View the full answer
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