It Is May 19th and You Own a June, European

question 36

Multiple Choice

It is May 19th and you own a June, European call on ABC Corp.with an exercise price of $50.The option trades at $40 and ABC is trading at $86.What should you do?

• A)Exercise the option now and take the profits.
• B)Buy more options on ABC Corp.
• C)Sell your ABC stock before its price declines.
• D)Sit and wait until the June expiration.