Chapter 02 · Section 2.1

Chrysler call

A July 50 Chrysler call was bought for a premium of $2.00. If the call is exercised when Chrysler stock is trading at $55.00, at what price may the holder purchase the underlying stock?

a) $2.00
b) $55.00
• c) $50.00
  Yes. A July 50 Chrysler call has an exercise price of $50.00. By exercising the option, the holder can buy 100 Chrysler shares at $50.00. Continue
  d) $48.00

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