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Calculate your net profit on the option contract

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Question - Profit on Option - You have purchased a call option contract on Dash common stock. The option has an exercise price of $32.00 and Dash's stock currently trades at $30.00. The option premium is quoted at $2.20.

a. Calculate your net profit on the option contract if Dash's stock price rises to $35.00 and you exercise the option.

b. Calculate your net profit on the option contract if Dash's stock price rises to $33.00 and you exercise the option.

c-1. If the stock price is $31.00, what would be the gain or loss if you exercise or not exercise the option.

c-2. Based on your answers above would it be more profitable to exercise the option or not exercise the option?

Reference no: EM132991392

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