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Business, 05.05.2020 17:11 destinyshanece08

Suppose you think fedex stock is going to appreciate substantially in value in the next 6 months. say the stock's current price, s0, is $100, and the call option expiring in 6 months has an exercise price, x, of $100 and is selling at a price, c, of $10. with $10,000 to invest, you are considering three alternatives.

a. invest all $10,000 in the stock, buying 100 shares.

b. invest all $10,000 in 1,000 options (10 contracts).

c. buy 100 options (one contract) for $1,000, and invest the remaining $9,000 in a money market fund paying 4% in interest over 6 months (8% per year).

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