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The current price of a stock is $145, and three-month European call options with a strike price of $149 currently sell for $6.40. An investor who feels that the price of the stock will increase is trying to decide between buying 100 shares and buying 1,600 call options. Both strategies involve an investment of $14,500.
1. If the share price increases to $162, the gain to the investor if he bought call options will be ___________ (answer).
2. If the share price increases to $162, the gain to the investor if he bought shares will be ____________(answer)
3. It is therefore advisable for the investor to buy ________ ( answer)in order to benefit from an increase in share price.
4. For both the strategies to be equally profitable the stock price should increase to _________ (answer).
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