Sam Owns a Call Option on a Stock and on the Expiration

question 7

Multiple Choice

Sam owns a call option on a stock and on the expiration date the stock price exceeds the strike price in the option contract, so Sam will:

• A) let the option expire without exercising the option.
• B) exercise the option and buy the stock at the strike price and hold it in his portfolio.
• C) exercise the option and buy the stock at the strike price and immediately resell it at the market price.
• D) buy the stock at the market price and then exercise the option by selling the stock at the strike price.

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Definitions:

Serotonin

A neurotransmitter that plays a key role in regulating mood, appetite, and sleep, among other functions.

Universal

Refers to something that is applicable to all cases or situations, often without exceptions.

Excessively Salty

Describes food or water that contains a higher concentration of salt than is considered palatable or healthy.

Settling Point

A theory suggesting that body weight tends to stabilize at a specific value based on a balance between energy intake and expenditure.