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Calculate net profit on the option contract

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Reference no: EM132412427

Question: You have purchased a call option contract on J & K common stock. The option has an exercise price of $27 and J & K's stock currently trades at $28. The option premium is quoted at $2.

a. Calculate your net profit on the option contract if J & K's stock price rises to $32 and you exercise the option.

b. Calculate your net profit on the option contract if J &KJ's stock price falls to $28.00 and you exercise the option.

c. If the stock price is $28.00, what would be the gain or loss if you exercise or not exercise the option.

d.  Based on your answers above would it be more profitable to exercise the option or not exercise the option?

Reference no: EM132412427

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