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What would be the payoff to the option

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Reference no: EM132861499

You are looking to buy a call option on a stock that is currently trading for $75. You believe that in one year, the stock could be trading at $90, or it could drop to $65. The option you are considering has a strike price of $68, and the current risk free rate is 6%.

Problem 1: What would be the payoff to the option if the stock ends up being worth $90 at the end of next year?

Group of answer choices

Option 1: 0

Option 2: $22

Option 3: $90

Option 4: $7

Reference no: EM132861499

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