Question 2 (a) An options investor made this remark: "The underlying stock of my call...
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Question 2 (a)
An options investor made this remark: "The underlying stock of my call option has reached its highest price ever. It has appreciated over 100% in the last 6 months. I should exercise my call now. Unlike a stock, the call option has limited life. Should the stock price fall due to a technical correction, the 2 months left before the call expires is too short to see a rebound in the price. If I were to hold the stock instead, I would definitely not sell now.
(i) Appraise the merit of the remark, assuming the stock does not pay a dividend. (10 marks)
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