Stock in Cheezy-Poofs Manufacturing is currently priced at $60 per share. A call
ID: 2769493 • Letter: S
Question
Stock in Cheezy-Poofs Manufacturing is currently priced at $60 per share. A call option with a $60 strike and 90 days to maturity is quoted at $2.80. Compare the percentage gains and losses from a $16,800 investment in the stock versus the option in 90 days for stock prices of $50, $60, and $70. (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 $60 per share. A call option with a $60 strike and 90 days to maturity is quoted at $2.80. Compare the percentage gains and losses from a $16,800 investment in the stock versus the option in 90 days for stock prices of $50, $60, and $70. (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
Stock Prices
Action
Payoff
Option % gain / (loss)
Stock % od Gain / (loss)
$50
Lapse Call option
-2.8
-4.67%
-16.66% (50-60 / 60)
$60
Indifference
-2.8
0
0
$70
Exercise Option
-2.8
4.67
16.66 (70-60/60)
Stock Prices
Action
Payoff
Option % gain / (loss)
Stock % od Gain / (loss)
$50
Lapse Call option
-2.8
-4.67%
-16.66% (50-60 / 60)
$60
Indifference
-2.8
0
0
$70
Exercise Option
-2.8
4.67
16.66 (70-60/60)
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