You bought two stock call option contracts with the strike price of $54.7. The option premium per contract was $3.5 and the spot price was $56 when you entered into the option contracts. The contract size per contract is 100. Now the spot price increased to $57.0 and the call option price increased to $4.65. Upon these price changes, you decided to exercise the options. 

Compute the rate of return on the options.

( Remember ROR = $NetProfit/$Cost )

Answer rating: 100% (QA)

To calculate the rate of return on the options we first need to determine the net profit and the cos... View the full answer