Three months ago an investment company bought for £8 a call option on a stock with an exercise price of £136. If the stock price at expiration of this option is £147. Select which of the following best describes the option value, the decision of the Investment Company and the return on investment thereon. A. Option value Decision Profit / (loss) % Exercise price – Stock price Exercise 37.5% B. Option value Decision Profit / (loss) % Stock price – Exercise price Don’t Exercise 2.2% C. Option value Decision Profit / (loss) % Exercise price – Stock price Exercise 2.2% D. Option value Decision Profit / (loss) % Stock price – Exercise price Exercise 37.5%
1. Three months ago an investment company bought for £8 a call option on a stock with an exercise price of £136. If the stock price at expiration of this option is £147. Select which of the following best describes the option value, the decision of the Investment Company and the return on investment thereon.
| A. |
Option value Decision Exercise price – Stock price Exercise 37.5% |
|
| B. |
Option value Decision Profit / (loss) % Stock price – Exercise price Don’t Exercise 2.2% |
|
| C. |
Option value Decision Profit / (loss) % Exercise price – Stock price Exercise 2.2% |
|
| D. |
Option value Decision Profit / (loss) % Stock price – Exercise price Exercise 37.5% |
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