Purchase Solution

# Call Option

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Suppose you believe that Bennett Environmental's stock price is going to increase from its current level of \$33.32 sometime during the next 7 months. For \$284.00 you could buy a 7-month call option giving you the right to buy 100 shares at a price of \$29 per share. If you bought a 100-share contract for \$284.00and Bennett's stock price actually changed to \$31.22 at the end of seven months, your net profit (or loss) after behaving rationally on the decision to exercise the option would be ______? Show your answer to the .01. Use a - sign if you lose money on the contract.

##### Solution Summary

The expert calculates profit/loss on a call option.

##### Solution Preview

Suppose you believe that Bennett Environmental's stock price is going to increase from its current level of \$33.32 sometime during the next 7 months. For \$284.00 you could buy a 7-month call option giving you the right to buy 100 shares at a price of \$29 per share. If you bought a 100-share contract for ...

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