Stock in Cheezy-Poofs Manufacturing is currently priced at $45 per share. A call option with a...

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Stock in Cheezy-Poofs Manufacturing is currently priced at $45per share. A call option with a $48 strike and 90 days to maturityis quoted at $1.50. Compare the percentage gains or losses from a$70,000 investment in the stock versus a $70,000 investment in theoptions (e.g., $70,000 worth of options) if, in 90 days, the stockprice is $40; if the stock price is $50; and if the stock price is$60.

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If the stock price is 40 loss in stock investment 40 45 45 1111 The options will expire worthless as the stock price at expiry 45 is less than the strike price 45 loss in options    See Answer
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Stock in Cheezy-Poofs Manufacturing is currently priced at $45per share. A call option with a $48 strike and 90 days to maturityis quoted at $1.50. Compare the percentage gains or losses from a$70,000 investment in the stock versus a $70,000 investment in theoptions (e.g., $70,000 worth of options) if, in 90 days, the stockprice is $40; if the stock price is $50; and if the stock price is$60.

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