Which the investor should exercise the call option

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Reference no: EM131075950

The XYZ Company expects stock prices to increase. The current stock price is $37. The company purchases a call option, with an exercise price of $40 and a premium of $2 per share. What is the minimum market price at which the investor should exercise the call option? The ABC Company expects stock prices to decrease. The current stock price is $96.

The company purchases a put option, with exercise price of $93 and a premium of $3 per share. Just before the expiration, stock price rises to $91. Should the investor exercise the put option or not? What will the total payoff per share be?

Reference no: EM131075950

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