A Trader Buys 100 European Call Options I

question 4

Short Answer

A trader buys 100 European call options i.e. one contract) with a strike price of $20 and a time to maturity of one year. The cost of each option is $2. The price of the underlying asset proves to be $25 in one year. What is the trader's gain or loss? Show a dollar amount and indicate whether it is a gain or a loss. _ _ _ _ _ _ _ _ _ _

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Definitions:

Stock Dissipation Rate

The rate at which a stock or resource is used up or depleted over time.

Greenhouse Gases

Gases in Earth's atmosphere that trap heat, leading to the greenhouse effect and global warming.

Stock Dissipation Rate

The rate at which a stock resource, like fish in a fishery or trees in a forest, is used up or depleted over time.

Pesticide Pollutants

Chemical substances used to kill pests, but when misused or overused, they can become environmental pollutants, affecting non-target species and ecosystems.