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goldfiish [28.3K]
3 years ago
6

A 6-month call option on ABC stock is priced at $3.60. The call option delta is 0.76. How will the approximate call option price

be computed if the underlying stock price increases by $1? Select one:
a. $3.60
b. $3.60 - $0.76
c. $3.60 + $0.76
d. $3.60 × .76
e. $3.60 × (1 + .76)
Biology
1 answer:
goldfiish [28.3K]3 years ago
6 0

$3.60 + $0.76 will be the approximate call option price be computed if the underlying stock price increases by $1

c. $3.60 + $0.76

<u>Explanation:</u>

Call option is a contract that is made between two parties generally a buyer and a seller during the financial transaction. The seller of an option is paid with the premium by a buyer. There are several factors that determine the amount of the premium.

Some of them are the underlying stock price relative to the strike price, time value until the option expires and the fluctuating price value.

The price of the premium is added to the strike price to compute the approximate call option price.

Call option price=Premium price+ strike price

       =3.60 + 0.76

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