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European call option contract on hurricanes

Problem:

Louis holds a six-month European call option contract on Hurricanes, Inc., a non-dividend paying common stock. Each contract is for 100 options. The exercise price of each call option is $100 and the option will expire in moments. Assume that there are no transaction costs or taxes associated with the contract.

a. What is his cash flow at expiration if the stock is selling for $130?

b. If the stock is selling at $90, what should Louis do?

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Finance Basics: European call option contract on hurricanes

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