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?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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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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