Stock Price Speculation With Call Options

Question

On Aug 10th, Ali expected that Tower stock price will increase during the coming two months. Therefore, he purchased an option for $4 per share; exercise price was $40 per share, On Sept 20th, Tower stock price was $50 per share.

a-  What is the type of the option contracts?
b-  Analyze Ali position on Sept. 20th.
c-  Analyze writer position on Sept 20th.

Summary

The question belongs to Finance and it discusses about call options which are used for making stock price speculations and gain profit from market movements. Apart from the position of the buyer has also been discussed in the solution.

Total Word Count 129

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