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Question
An investor purchased a call option that allows her to purchase 100 shares of Dell Computer common stock for $45 per share any time during the next six months. The price she paid for the option was $2.50 per share, or $250 total, and the current market price of Dell's stock is $42.50. If the price of Dell increases to $50 and the investor decides to exercise it, what will be the gain or loss that results from the option position that was held? Ignore taxes and commissions.
a. $500 gain
b. $250 loss
c. $750 gain
d. $250 gain
e. None of the above.
Answer
This answer is hidden. It contains 42 characters.
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