4. You purchase one IBM July 250 call contract for a premium of $4 (note that July 90 means contractexpires in July and has a strike price of $250; one contract is for 100 shares). The stock has a 2 for 1split prior to the expiration date. You hold the option until the expiration date when IBM stock sellsfor $128 per share. You will realize a on the investment.A. $300 profitB. $100 lossC. $400 lossD. $200 profit

The call option is derivative product that derive value from underlying stock and it gives the…

Answered: You purchase one IBM July 250 call…

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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