Reference no: EM133085750

Question - You have purchased a call option contract on Johnson and Johnson Company stock. The option has an exercise price of $89 and the stock is currently selling for $90.43 The Option premium quoted is $2.17 per contract. {Please note: 1 option gives the right to buy 100 shares}

Calculate your net profit on the Options contract if the stock price rises to $94 and you exercise the option.

Calculate the net profit on the options contract if the stock price falls to $89.50 and you exercise the option.

When the price falls to $89.50 show it is more profitable to exercise than not exercise the option.