Question: Question 2 Consider a call option selling for $55. The underlying stock sells for $50. Would you buy this call option? Articulate your reasons. Assume

Question 2

  1. Consider a call option selling for $55. The underlying stock sells for $50. Would you buy this call option? Articulate your reasons.
  2. Assume a call option with an exercise price of $18. The underlying stock sells for $20 and the option is about to expire soon. The call is selling for $1 now. How can you benefit from this situation? Is this situation sustainable? Provide your reasoning. What do you conclude?

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