Circular File Stock Is Selling for $25 a Share

question 13

Essay

Circular File stock is selling for $25 a share.You see that call options on the stock with exercise price of $20 are selling at $3.What should you do? What will happen to the option price as investors identify this opportunity? Then you observe that put options on Circular File with exercise price $30 are selling for $4.What should you do?

---

Definitions:

Language Abilities

Refers to the capacity of individuals to communicate through spoken, written, or signed forms of language, encompassing both understanding and producing language.

Cognitive-developmental Perspective

A theory in psychology that emphasizes how children's thinking and reasoning change over time through stages of cognitive development.

Moral Behavior

Actions that are consistent with societal and personal norms of right and wrong.

Reinforcement And Modeling

Techniques in behavioral psychology for encouraging certain behaviors through rewards (reinforcement) and learning by observing and imitating others (modeling).