On January $2,2023,$ Jackson Corporation purchased a call option for $$500$ on Walter Inc.$\text{'}$s common shares. The call option gives

Jackson the option to buy $1,000$ shares of Walter at a strike price of $$30$ per share any time during the next six months. The market

price of a Walter share was $$30$ on January $2,2023($the intrinsic value was therefore $$0).$ On March $31,2023,$ the market price for

Walter stock was $$42$ per share, and the fair value of the option was $$17,500.$

Based on the available facts, explain whether Jackson is using the option as a hedge or for speculative purposes.

Explain what Financial Risk the transaction exposes The Institute