The Price of ABC Stock Is Currently $42 Per Share

Multiple Choice

The price of ABC stock is currently $42 per share, but in six months you expect it to rise to $50. ABC does not pay a dividend. You buy a six-month call on ABC, with a strike price of
$45) The option cost $200. What holding period return do you expect on this call? Ignore transaction costs and taxes.

A) 150%
B) 200%
C) 250%
D) 300%