You own a call option on Intuit stock with a strike price of $40. The option will
Question:
You own a call option on Intuit stock with a strike price of $40. The option will expire in exactly three months’ time.
a. If the stock is trading at $55 in three months, what will be the payoff of the call?
b. If the stock is trading at $35 in three months, what will be the payoff of the call?
c. Draw a payoff diagram showing the value of the call at expiration as a function of the stock price at expiration.
In finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity.
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Plan Value the call if the stock is selling at 55 and 35 Draw a payoff diagr...View the full answer
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