You have purchased a call option contract on Smith & Smith common stock. The option contract is for 100 shares. The option has an exercise price of $43.00 and S & S’s stock currently trades at $40.00. The option premium is quoted at $2.00.
A. If S & S’s stock price rises to $44.00, while you exercise the option? Calculate your net profit/loss on the option contract if
B. If S & S’s stock price rises to $48.00, while you exercise the option? Calculate your net profit/loss on the option contract if.
C. If the stock price rises to $42.00, would you exercise or not exercise the option and what would be your gain or loss
D. You will make a profit on the option if the S & S stock price rises above what amount To earn a profit, you must recoup the price you paid for the call, plus the exercise price: