A small chocolate factory receives a large order for chocol

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1.In July, a small chocolate factory receives a large order for chocolate bars to be delivered in November. The spot price for Cocoa is $2,400 per metric ton. It will  need 10 metric tons of Cocoa in September to fill this order. Because of limited  storage capacity and volatility in the world cocoa prices, the company decides the  best strategy is to buy 10 call options for $53 each with strike price of $2,400 (equal  to the current price) with a maturity date of September 2012. When the options expire  in September, how much will the company pay (including the cost of the options) for  cocoa if the spot price in September proves to be: a) $2,300, and b) $2,600? 

Reference no: EM13749305

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