Suppose the current price of a stock is $100, and you think it will appreciate. A call option expiring in one year where
Posted: Thu May 05, 2022 8:27 am
Suppose the current price of a stock is $100, and you think it
will appreciate. A call option expiring in one year where X=100 is
selling at C=10. You have 10,000 to invest, and are considering
three alternatives:
Invest everything in the stock
Invest everything in the options
Buy 100 options and invest the remainder in a risk-free
portfolio paying 4% annual interest.
All stocks All options Risk free + 100 options Stock prices one year from now $80 $100 $110 $120
will appreciate. A call option expiring in one year where X=100 is
selling at C=10. You have 10,000 to invest, and are considering
three alternatives:
Invest everything in the stock
Invest everything in the options
Buy 100 options and invest the remainder in a risk-free
portfolio paying 4% annual interest.
- Suppose The Current Price Of A Stock Is 100 And You Think It Will Appreciate A Call Option Expiring In One Year Where 1 (7.24 KiB) Viewed 36 times