You Buy 1,000 Shares of Sunbeam at 11 1/8 and Write

question 61

Essay

You buy 1,000 shares of Sunbeam at 11 1/8 and write 10 calls at a premium of 4 3/8 with a strike price of 7 1/2. The stock goes to 20 in 6 months. You receive a 8 cent dividend per share. If the calls are exercised (which is the likely assumption), what is your percentage return?

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Definitions:

Correspondent Inference

Causal attribution of behaviour to underlying dispositions.

Ingroup Norm

Shared expectations and rules that guide the behavior of members within their social group.

Extraverted

Characterized by outgoing, sociable, and energetic behavior.

Personality Factor

Fundamental traits or characteristics that consistently influence an individual's behavior and attitudes, shaping their personality.