It is May 19^th and you own a June,European call on ABC Corp.with an exercise price of $50.The option trades at $40 and ABC is trading at $86.What should you do? A) Exercise the option now and take the profits. B) Buy more options on ABC Corp. C) Sell your ABC stock before its price declines. D) Sit and wait until the June expiration.

Question

Quizplus · Accepted Answer

The option still has significant time value, as it has not reached its expiration date yet. Additionally, the stock price is higher than the exercise price, indicating the potential for further gains. It may be advantageous to wait and see if the stock price continues to rise before exercising the option or selling it.

It Is May 19th and You Own a June,European Call

It Is May 19^th and You Own a June,European Call