Suppose you believe that Johnson Company's stock price is going to increase from its current level of
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Question:
Suppose you believe that Johnson Company's stock price is going to increase from its current level of $16 sometime during the next 5 months. For a total of $625 you can buy a 10-month call option giving you the right to buy 100 shares at a price of $21 per share. If you buy this option for $625 and Johnson's stock price in 10 months from now right before the maturity of this option is $20/share, would you exercise your call option and what would your net pre-tax profit or loss be?
Related Book For
Investment Analysis and Portfolio Management
ISBN: 978-0538482387
10th Edition
Authors: Frank K. Reilly, Keith C. Brown
Posted Date: