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Investment in stocks vs investment in options

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Janet Lee is considering purchasing shares in DM Designs. The share price is currently $64. Alternatively, Janet can buy an out of the money call option with a striking price of $65, that is currently priced at $2.25. Janet expects the stock price to rise to $68. What is the difference between the stock's return on investment and the option's return on investment?

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Solution Summary

Calculates the difference between the stocks return on investment and the option's return on investment.

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Janet Lee is considering purchasing shares in DM Designs.  The share price is currently $64.  Alternatively, Janet can buy an out of the money call option with a striking price of $65, that is currently priced at $2.25.  Janet expects the ...

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