Author Question: You have $5,000 to invest and you are considering buying 100 shares of big-box retailer Buy n' Large ... (Read 318 times)

bio_gurl · **on:** Apr 25, 2021

You have $5,000 to invest and you are considering buying 100 shares of big-box retailer Buy n' Large or 10 call options on the shares. The call option expires in six months, has a strike price of $50 and has a premium of $5 (per share). The stock price is currently $50. Assume that the stock price rises to $70 by the option expiry date. What is the ratio of the rate of return on the calls over the return on the stock?
◦ 2.50
◦ 5.00
◦ 7.50
◦ 10.00

KKcool · **Reply #1 on:** Apr 25, 2021

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