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Eduardo Owns an Option That Gives Him the Right to Purchase

Question 15

Multiple Choice

Eduardo owns an option that gives him the right to purchase shares of ABC stock at a price of $18 a share.Currently,the stock is selling for $21.60.He would like to profit on this stock but is not permitted to exercise his option for another 2 weeks.Contrary to other investors,he believes the stock price will decline significantly over the next 2 weeks.Given this situation,he should


A) sell his option today.
B) buy call options today that expire in 2 weeks.
C) wait for 2 weeks and then immediately exercise his option.
D) purchase shares of ABC today and then sell his option in 2 weeks.
E) just forget about it because he cannot profit from this situation.

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