Question 7
You have a bullish view on the US stock market for the three days. You have $100 to invest.
5 pts
You decide to buy call options based on an ETF that tracks the S&P 500 Index. The option is American and the strike price of the option is
$102. That is, at any time, you can exercise the option and buy this ETF from the option seller at $102. The premium of the call option is $2 per
share, i.e., if you spend $2, you buy 1 share of the option contract which allows you to buy 1 share of the ETF should you decide to do it. You
decide to go all in and buy this call option as much as possible.
The S&P 500 Index earns a return of 3.53%, -4.68%, and 7.27% for the next three days.
You exercise your call options after these three days.
What's the return of your investment over these three days?
Enter a number with two decimal points. Answer the question in percentage terms, i.e., if the answer is 20%, enter 20.00.