Compute the break-even ibm stock price

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Consider the September 2012 IBM call and put options in Problem 20-3. Ignoring any interest you might earn over the remaining few days' life of the options, consider the following.

a. Compute the break-even IBM stock price for each option (i.e., the stock price at which your total profit from buying and then exercising the option would be 0).

b. Which call option is most likely to have a return of ?100%?

c. If IBM's stock price is $216 on the expiration day, which option will have the highest return?

 

Reference no: EM13268458

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