Suppose that today is early January. Let’s consider one Amer…
Suppose that today is early January. Let’s consider one American call option contract, with an April expiration month, on 100 shares of Intel common stock at a strike price of $60.00 per share. Suppose that Intel common stock currently is trading for $57.32 per share in the Nasdaq Stock Market. Today, Byron buys one contract from Selena, the option writer, for a premium of $1.95 per share. Why would Byron buy a call option contract that gives him the right to buy Intel at $60.00 per share when the stock currently is priced at the lower price of $57.32 in the stock market? (Choose the best answer.)
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