Rise for strategy b to be more profitable

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The current price of XYZ stock is $55, and two-month European call options with a strike price of $56 currently sell for $11. As a financial analyst at Merrill Lynch, you are considering two trading strategies regarding stocks and options. Strategy A involves buying 100 shares and Strategy B includes buying 500 call options. Both strategies involve an investment of $5,500.

a. How much is the profit (loss) for strategy A if the stock closes at $65

b. How much is the profit (loss) for strategy B if the stock closes at $65?

c. How high does the stock price have to rise for strategy B to be more profitable

Reference no: EM133233459

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