At expiry, a holder of a call option (with an exercise price of $18.50, purchased for a premium of $1.05)over JB Hi-Fi shares will NOT exercise if the share-price is $19.00.

Question

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At expiry, if the share price ($19.00) is higher than the exercise price ($18.50), the holder of a call option can exercise the option to buy the shares at $18.50 and immediately sell them at the market price of $19.00, making a profit before considering the premium paid.

At Expiry, a Holder of a Call Option (With an Exercise