Answer Happy

2. You buy a European call option. The underlying is share B. The strike price is £120. The premium is £10. The current price of the share B is £103. a. Please list all possible closing transactions for your position. (3 marks) b. Under what circumstances will you make a positive profit on this investment on maturity, if you keep it until maturity? (1 marks) c. Can you be exercised against? If yes, under what circumstances? (1 marks) d. Can you exercise the option? If yes, under what circumstances? (1 marks) e. You consider closing the position prematurely by trading the option. Under what circumstances would trading the option make sense? (1 marks) f. Closing your position prematurely by trading the option means: opening a long put position. Why true or false? (1 marks) g. If you had bought an American style option instead (same underlying, maturity, strike price), what would have been its price? (1 marks) Total 9 marks for question 2