Suppose you think FedEx stock is going to appreciate substantially in value in the next...
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Suppose you think FedEx stock is going to appreciate substantially in value in the next 6 months. Say the stocks current price is $100, and a call option expiring in 6 months has an exercise price of $100 and is selling at a premium of $10. With $10,000 to invest, you are considering investing all $10,000 in 100 options (one contract) for $1,000 and invest the remaining $9,000 in a money market fund paying 4% in interest over 6 months (8% per year). Compute the total value of your portfolio 6 months from now if the price of FedEx stock is $80.
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