2. Look at the Apple options from below. Suppose you buy an October expiration call option...

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Finance

2. Look at the Apple options from below. Suppose you buy anOctober expiration call option with exercise price $100.
Apple (AAPL)
Underlying stock price, S = $102.05
Expiration
Strike (E)
Call
Put
September
95
6.20
0.21
October
95
6.35
0.33
September
100
2.20
1.18
October
100
2.62
1.55
September
105
0.36
4.35
October
105
0.66
4.75
If the stock price in October is $105, will you exercise yourcall? What are the net profit and the rate of return if youexercise the call?Â Â
Will you exercise the call if you had bought the October callwith exercise price $95?
Will you exercise the option if you had bought an October putwith exercise price $100?

Answer & Explanation Solved by verified expert

3.8 Ratings (615 Votes)

a Ifthe stock price in October is 105 you will exercise your call because spot price is October is higher than than exercise price A call option pays off to its buyer when spot price at expiration is higher than exercise price Call option gives a right to its buyer to purchase the underlying at See Answer

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Apple (AAPL)	Underlying stock price, S = $102.05
Expiration	Strike (E)	Call	Put
September	95	6.20	0.21
October	95	6.35	0.33
September	100	2.20	1.18
October	100	2.62	1.55
September	105	0.36	4.35
October	105	0.66	4.75