Multiple Choice
You purchased a call option for a premium of $4.The call has an exercise price of $29 and is expiring today.The current stock price is $31.What would be your best course of action?
A) Exercise the call because the stock price is greater than the exercise price.
B) Do not exercise the call because the stock price is greater than the exercise price.
C) Do not exercise the call because the difference between the exercise price and the stock price is not enough to cover the amount of the premium.
D) Exercise the call to get a positive net return on the investment.
E) Do not exercise the call to avoid a negative net return on the investment.
Correct Answer:
Verified
Correct Answer:
Verified
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