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You are looking at a stock priced at $60 per share that you expect to increase...

You are looking at a stock priced at $60 per share that you expect to increase in value over the next year. A call option on this stock with exercise price = $60 and a maturity of one year is selling for $6. With $6,000 to invest, you are considering three alternatives:

            i.   Invest all $6,000 in the stock

            ii. Invest all $6,000 in options

iii. Buy 200 options and invest the remaining funds in a money market fund earning 1%

Construct a table showing your rate of return for each alternative investment if the stock price is 40, 45, 50, 55, 60, 65, 70, 75, 80, 85, 90 one year from now.

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago
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