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Ned sells a call option on XYZ with a strike price of 25, receiving a premium...

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Finance

Ned sells a call option on XYZ with a strike price of 25,receiving a premium of $4.25.

Don buys a calloption on XYZ stock with a strike price 25 for $4.25. XYZ currentlytrades for $19 per share. Both traders will make money on theiroption trade:

a.    If XYZ stock stays between $18 and $25 pershare

b.    If XYZ stock is trading at exactly $25 whenthe call option expires

c.    If XYZ stock is trading at exactly $19 whenthe call option expires

d.    Under no circumstances

Answer & Explanation Solved by verified expert
4.2 Ratings (873 Votes)
Ned sells a call option with a strike price of 25 he earns a premium of 425 He will want that the stock price remains below the strike price so that the option buyer does not exercise and the option goes worthless Ned sells the call option at    See Answer
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Transcribed Image Text

Ned sells a call option on XYZ with a strike price of 25,receiving a premium of $4.25.Don buys a calloption on XYZ stock with a strike price 25 for $4.25. XYZ currentlytrades for $19 per share. Both traders will make money on theiroption trade:a.    If XYZ stock stays between $18 and $25 pershareb.    If XYZ stock is trading at exactly $25 whenthe call option expiresc.    If XYZ stock is trading at exactly $19 whenthe call option expiresd.    Under no circumstances

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