# I have a question about Stocks and Bonds.?

• I have a question about Stocks and Bonds.?

Answer #1 | 20/12 2013 05:06
A. 1400 Purchase 100 shares at 50 will cost you \$5000 Purchase 1 call contract will cost you \$400 then the exercise of the call at 60 will cost you \$6000 (total cost of \$6400) Therefore the option strategy will cost you \$ 1400 more.
Answer #2 | 20/12 2013 13:04
Well considering the fact that when you exercise, it is the premium that is forfeited, so that is the \$400 dollars. By exercising he would have made \$1300- \$400 premium= \$900 profit Buying the stock at \$60 per share he would have made 100shares x 13 = \$1300 dollars So id say a \$400 difference? <<<<< \$1300.00 - \$900.00 = yea unless He bought at \$50 per share, so \$73- \$50 = 23 and 23 x 100 = \$2300 \$2300 - \$900 = \$1400.00 <<<< And you question was not very clear but I believe it was my last answer.
Answer #3 | 21/12 2013 04:49
He paid \$60 per share instead of \$50 per share, a \$10 difference * 100 shares = \$1,000 AND he paid \$400 for the call. Total money he could have saved by buying the stock three months earlier vs. buying the call and then buying the stock at \$60 = \$1400 To put it another way... buy 100 shares at \$50 = \$5,000 VS. buy call for \$400 + buy 100 shares at \$60 = \$6400 difference: \$1400