It Is May and You Own a June Call on ABC

question 25

Multiple Choice

It is May and you own a June 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 the stock of ABC Corp because option traders seem to be optimistic about its prospects.
• C) Sell your ABC stock before its price declines.
• D) Sit and wait until the June expiration.

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Definitions:

New Social Movement Theory

A sociological theory focusing on the unique characteristics of social movements that emerged in the late 20th century, emphasizing identity, culture, and decentralized organization.

Frame Alignment Theory

A sociological theory that explains how social movement organizations align their activities and ideologies with the interests and beliefs of potential new members to increase participation.

Organizational Base

The underlying structure or foundation of an organization, including its members, resources, and operational framework.

Reserve Army

In Marxist theory, refers to the pool of unemployed or underemployed laborers in capitalist societies, which can be used to depress wages or fill labor demands during economic peaks.