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Suppose that Apple’s current stock price is $120.56 and a call option with a 3-month maturity on...

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Finance

Suppose that Apple’s current stock price is $120.56 and a calloption with a 3-month maturity

on Apple stock and an exercise price of X = 130 currently sellsfor $7.00. Suppose that you

buy one call contract and hold it till expiration. Keeping inmind that a call contract is written

on 100 shares, determine the dollar payoffs, dollar andpercentage profit/loss for this option

position for each of the following closing prices of Apple stock(ST) on option expiration day

a) ST= 120

b) ST= 130

c) ST= 145

Answer & Explanation Solved by verified expert
4.1 Ratings (716 Votes)
Dollar payoffs of a call option is Maximum of Apple stock ST on option expiration day exercise price X 0 And profitloss payoffs price of call option Call    See Answer
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Transcribed Image Text

Suppose that Apple’s current stock price is $120.56 and a calloption with a 3-month maturityon Apple stock and an exercise price of X = 130 currently sellsfor $7.00. Suppose that youbuy one call contract and hold it till expiration. Keeping inmind that a call contract is writtenon 100 shares, determine the dollar payoffs, dollar andpercentage profit/loss for this optionposition for each of the following closing prices of Apple stock(ST) on option expiration daya) ST= 120b) ST= 130c) ST= 145

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