Posted: January 10th, 2022
One of the categories of options available to investors and speculators is LEPOs. Assuming 7.00 per cent margin, what would be the percentage return and dollar profit to an investor who purchased one LEPO (for 1000 shares) for a premium of $26220 and later closed out the position when the LEPO premium was $28430? (LO 20.3)
Discuss the relationship between the exercise price of an option, the current market price of the underlying asset and the intrinsic value of the option. In your answer, explain the money position of an option. (LO 20.4)
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