Suppose that an investor is analysing one European call option on an underlying stock with the...

Suppose that an investor is analysing one European call option on an underlying stock with the following characteristics: Option price is $5, the current stock price is $95, the strike price = $100, and the expiry date of the option is in 2 months. Which of the following statements is incorrect?

Select one:

a. The break-even price for taking a long position in this call option is $100.

b. Buying the call option will give the investor some advantages over buying the underlying stock

c. The maximum profit for taking a long position in this call option is unlimited while the maximum loss for taking a long position in this call option is $5.

d. The investors should buy the call option if he expects the price of the underlying stock in the next two months will be more than $100.

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jeff jeffy answered 1 year ago

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