A call option is a right to buy certain security at a price when the holder is expecting that the prices may increase. The call option gives the holder a right not obligation to buy a share for example for $50 when the market price is $60. In this case, the holder can gain $10 from buying the share for $50 by exercising the call option and then selling the share in the market for $60.
The price that is fixed in a call option is called the strike price that in the above example is $50. The share price may fall or increase but the option will only be exercised when it is beneficial for the holder. If the price falls below $50 then the holder will not exercise the option and buy the share at market value instead of exercising the option.
Transit Airlines provides regional jet service in the Mid-South.
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a. Rework Problem 18-4 using the spreadsheet model.
A put option that expires in six months with an exercise price
Assume that you have shorted the call option in Problem 2.
The treasurer of Miller Co. has read on the Internet that
A stock currently sells for $32.00. A 6
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You own a call option on Intuit stock with a strike price
