On the last day of October, you are considering the purchase of 100 shares of A...
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On the last day of October, you are considering the purchase of 100 shares of A Corporation common stock selling at $37 1/2 per share and also considering an A Corporation option. Calls Puts Price 35 December March December March 3 3/4 5 1 1/4 2 40 2 1/2 3 1/2 4 1/2 4 3/4 a. If you decide to buy a March call option with an exercise price of 35, what is your dollar gain (loss) if you close your position when the stock is selling at 43 1/2? Why? b. If you but a December put option with an exercise price of 40, what is the gain/loss if you close position when stock is trading at S$33.5? Why? On the last day of October, you are considering the purchase of 100 shares of A Corporation common stock selling at $37 1/2 per share and also considering an A Corporation option. Calls Puts Price 35 December March December March 3 3/4 5 1 1/4 2 40 2 1/2 3 1/2 4 1/2 4 3/4 a. If you decide to buy a March call option with an exercise price of 35, what is your dollar gain (loss) if you close your position when the stock is selling at 43 1/2? Why? b. If you but a December put option with an exercise price of 40, what is the gain/loss if you close position when stock is trading at S$33.5? Why?
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a If you purchase a call option itll only be profitable if the future spot price is greater than the ... View the full answer
Related Book For
Principles of Accounting
ISBN: 978-1133626985
12th edition
Authors: Belverd E. Needles, Marian Powers and Susan V. Crosson
Posted Date:
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