Stock in Cheezy-Poofs Manufacturing is currently priced at $50 per share. A call
ID: 2634692 • Letter: S
Question
Stock in Cheezy-Poofs Manufacturing is currently priced at $50 per share. A call option with a $50 strike and 90 days to maturity is quoted at $3.75. Compare the percentage gains and losses from a $18,750 investment in the stock versus the option in 90 days for stock prices of $40, $50, and $60.(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Leave no cells blank - be certain to enter "0" and select "None" wherever required. Input all amounts as positive values. Omit the "%" sign in your response.)
Stock in Cheezy-Poofs Manufacturing is currently priced at $50 per share. A call option with a $50 strike and 90 days to maturity is quoted at $3.75. Compare the percentage gains and losses from a $18,750 investment in the stock versus the option in 90 days for stock prices of $40, $50, and $60.(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Leave no cells blank - be certain to enter "0" and select "None" wherever required. Input all amounts as positive values. Omit the "%" sign in your response.)
Explanation / Answer
Price of Stock
50
Strike price
50
Premium of call option
3.75
Maturity
90 days
Total Investment
18750
No of option bought(Investment/ Premium)
5000
No of Stock Bought(Investment/ Stock price)
375
Options % Gain/Loss
=(5000*(Max(S-50,0)-3.75)/18750
Stock % Gain/Loss
=(375*(S-50)/18750)
$40
-100.00%
-20.000%
$50
-100.00%
0.000%
$60
166.67%
20.000%
Price of Stock
50
Strike price
50
Premium of call option
3.75
Maturity
90 days
Total Investment
18750
No of option bought(Investment/ Premium)
5000
No of Stock Bought(Investment/ Stock price)
375
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