Answered: A speculator purchased a call option…

A speculator purchased a call option with an exercise price of $35 for a premium of $4. The option was exercised a few days later when the stock price was $34. What was the return to the speculator?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter5: Financial Options

Section: Chapter Questions

Problem 3Q

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A speculator purchased a call option with an exercise price of $35 for a premium of $4. The option was exercised a few days later when the stock price was $34. What was the return to the
speculator?
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