The Standard & Poor’s Depositary Receipts (SPDRs) is an exchange-traded fund in the United States that is designed to track the S&P 500 stock market index. The current price of a share of SPDRs is $113. A trader has just bought call options on shares of SPDRs for a premium of $3 per share. The call options expire in five months and have an exercise price of $120 per share. On the expiration date, the trader will exercise the call options (ignore any transaction costs) if and only if the shares of SPDRs are trading:

A. Below $120 per share.

B. Above $120 per share.

C. Above $123 per share.

Answer rating: 100% (QA)

Answer Above 123 per share The break even Price 120 exercise price 3 call premium 123 Bu... View the full answer