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Calculation of the Holding Period Payoff on the Call for an Investment

Question

Assume an investor took a long position in both a stock and the stock’s call option.  At the time of the opening trade, the securities were trading at 18-7/8 and 1-1/8 respectively.  The exercise price on the call was 20.

Now suppose this investor closes the position in the call option and the closing trade on the call is made when the stock price is 21-1/2.  What is the holding period payoff Z on the call?

Summary

This question belongs to finance and discusses about calculation of the holding period payoff on the call for an investment.

Total word count: 24

 

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