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Circle Stores Stock Is Priced at $28 a Share

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Circle Stores stock is priced at $28 a share.A $40 call on this stock has five months until expiration and a call price of $0.15.Why would an investor purchase a call that is so far out of the money?


Definitions:

Liabilities

Financial obligations or debts a company owes to others, which must be settled over time by transfer of economic benefits.

Accumulated Depreciation

The total amount of depreciation expense charged against an asset over its useful life, reducing its book value.

Liability Account

An accounting record that represents an obligation to pay money to another party, reflects a company's debts or financial obligations.

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