How high does the stock price have to rise for an investment

Reference no: EM13273564

The price of a stock is $25 and the price of a three-month call option on the stock with a $27 strike is $2.50. Suppose a trader has $2,500 to invest and is trying to choose between buying 1,000 options (10 contracts) or 100 shares of stock. How high does the stock price have to rise for an investment in options to be as profitable as an investment in the stock?

Reference no: EM13273564

Questions Cloud

How denoting the initial unknown concentration cd2 : Denoting the initial, unknown concentration CD2+, write an equation to calculate the final concentration , CD2+ considering the dilution factor, units are ppm.

Determine the snr in output of each systems in db : A voice frequency massage signal (fmax=B= 4 kHz) is transmitted by three binary systems: PCM (μ = 255), DPCM (α = 10), and DM. The bit rate required is Rb = 120 kbps, and m_p2/(m2 (t))= 2 a) Determine the SNR in output of each systems in dB.

How much pressure in psi is lost to friction : If 100 gpm are flowing in the piping system below, and Gauge 1 reads 120psi and Gauge2 reads 94psi, how much pressure in psi is lost to friction

What gold futures price per ounce will trigger a margin call : A company enters into a long futures contract to buy 200 ounces of gold for $1,278 per ounce. The initial margin is $4,000 and the maintenance margin is $1,000. What gold futures price per ounce will trigger a margin call?

How high does the stock price have to rise for an investment : How high does the stock price have to rise for an investment in options to be as profitable as an investment in the stock?

Creativity and continuous learning : Why is continuous learning so important in today's organizational environment? Describe the relationship between creativity and continuous learning, and give an example of how creativity helps an organization to suceed.

How to design a proportional control law : where V is given in meters per second, U is in degrees, and W is the percent grade of the road. Design a proportional control law U = -kp V that will maintain a velocity error of less than 1 m/sec in the presence of a constant 2% grade.

Compute the energy leaving with water : calculate the energy leaving with water. Solve this problem with the use enthalpy of the product stream

Calculate the change in the length of the solenoid : A 5.06 10-5 H solenoid is constructed by wrapping 63 turns of wire around a cylinder with a cross-sectional area of 9.70 10-4 m2 , Determine the change in the length of the solenoid

User Account

All Pages