Suppose you think MSFT stock is going to appreciate substantially in the next yr. The stock's current price is $100and call options expiring in 1 yr has an exercise price of $100 and is selling for $5. With $1,000 to invest you are considering 2 options:
i) Invest$1K in stock and
ii) Invest$1K in options
What are profits and HPR of i) and ii) if stock is worth $90 in 1 yr?
What are profits and HPR of i) and ii) if stock is worth $180 in 1 yr?