An Investor Is Considering Buying 500 Shares of ABC Company

Multiple Choice

An investor is considering buying 500 shares of ABC Company at $32 per share. Analysts agree that the firm's stock price may increase to $45 per share in the next four months. As an alternative, the investor could purchase a 120-day call option at a striking price of $30 for $5,000. What profit would the investor realize if the stock price increased to $42 per share?

A) $0
B) $1,000
C) $4,000
D) $6,000