The current price of a stock is 94 and 3-month eurpean call

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The current price of a stock is $94, and 3-month Eurpean call options with a strike price of $95 currently sell for $4.70. An investor who feels that the price of the stock will increase is trying to decide between buyng 100 shares and buying 2,000 call options (= 20 contracts). Both strategies involve an investment of $9,400. What advice would you give? How high does the stock price have to rise for the option strategy to be more profitable?

Reference no: EM13623481

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