You purchase a call option for $3.45 17 days ago. The call has a strike of 45 an

Question

You purchase a call option for $3.45 17 days ago. The call has a strike of 45 and the stock is now trading for 51 . If you exercise the call today, what will be your holding period return? A--100% B-173.9% C-57.5% D-none of the answers are correct E-73.9% You purchase a call option for $3.45 17 days ago. The call has a strike of 45 and the stock is now trading for 51 . If you exercise the call today, what will be your holding period return? A--100% B-173.9% C-57.5% D-none of the answers are correct E-73.9% A--100% B-173.9% C-57.5% D-none of the answers are correct E-73.9%

Explanation / Answer

Call option purchase price is $3.45.

Gain on the stock strike price = $51 - $45 = $6

Net gain on the Call opiton bought = $6 - $3.45 = $2.55

On exercising the call today, the holding period return = $2.55 / $3.45 = 73.90% (OPTION E)

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