Rate of return from the investment in call option

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Reference no: EM131820370

Suppose you have $38,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $35 per share. You also notice that a call option with a $35 strike price and six months to maturity is available. The premium is $5.00. MMEE paid a $0.80 per share dividends.

What is your annualized percentage rate of return from the investment in call option if, in six months, MMEE is selling for $36 per share?

Reference no: EM131820370

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