Question:
What would be the profit or loss per share of stock to an investor who bought the
October maturity IBM call option with exercise price $100, if the stock price at the
expiration of the option is $104?
My answer:
The payoff to the call option is 104-100= $4.
The call cost $1.80 (given in graph). The profit is $2.20 per share.
My question is..with the answer above how would i calculate the rate of return? please help. thanks! (which numbers would i use to plug into the ror forumla)
What would be the profit or loss per share of stock to an investor who bought the
October maturity IBM call option with exercise price $100, if the stock price at the
expiration of the option is $104?
My answer:
The payoff to the call option is 104-100= $4.
The call cost $1.80 (given in graph). The profit is $2.20 per share.
My question is..with the answer above how would i calculate the rate of return? please help. thanks! (which numbers would i use to plug into the ror forumla)