The Premium for a Contract of 100 Call Options Is

question 80

Multiple Choice

The premium for a contract of 100 call options is $400. The strike (exercise) price per share is $30 and the current market price of a share is $33. The investor should:

• A) Let the option expire because the market price has to be below the strike price of a call before an investor can make a profit on the investment.
• B) Allow the option to expire because the premium of $4 is greater than the difference between the strike price and market price.
• C) Exercise the options because she will make a profit of $300.
• D) Exercise the options in order to minimize the loss to $100.

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Definitions:

Vendor

An individual or company offering goods or services for sale.

Encroachments

Unauthorized intrusion or extension of a building, structure, or other improvement onto another's property.

Easements

A legal right to use another person's land for a specific limited purpose, such as right of way or utility access, without owning it.

Physical Boundary

The real, tangible boundaries that define the perimeter of a property, often marked by fencing, walls, or natural landmarks.