An options investor made this remark: "The underlying stock of my call option has reached...
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An options investor made this remark: "The underlying stock of my call option has reached its highest price ever. It has appreciated over 100% in the last 6 months. I should exercise my call now. Unlike a stock, the call option has limited life. Should the stock price fall due to a technical correction, the 2 months left before the call expires is too short to see a rebound in the price. If I were to hold the stock instead, I would definitely not sell now.
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1) Appraise the merit of the remark:
i) Assuming the stock does not pay a dividend.
ii) Assuming the stock pays a dividend
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