Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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You took a long position in a call option on DBS’s share. The option premium is $7 per contract and the option has an exercise price of $25. DBS’s share is currently trading at $30.
(d) Construct a payoff function to graphically illustrate your profit level when DBS’s share is $20, $30 and $40, and indicating the share price for you to breakeven for this long position.
(e) What must the share price be for the option to be at the money?
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