Reference no: EM132028875

Today (T=O), you are considering purchasing 100 shares of Company X at $60 per share. Assume all call and put option contracts on Company X have the same expiration date. Which of the following statements is most likely FALSE?

a) One out of the money covered call would provide less income than one at the money covered call

b) One at the money protective put would cost more than one out of the money protective put

c) Purchasing one at the money call would cost more than purchasing one at the money put

d) If you expect Company X’s share price to rise to $90 between now and the expiration date, you would profit more from purchasing one call option with a strike price of $60 for $1 than if you purchased 100 shares of Company X at $60 per share

e) If you purchase 100 shares of Company X at $60 per share and one put option for $1 with a strike price of $60, you have effectively purchased $6000 of insurance for $100 (in the event Company X declares bankruptcy)