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Dear Tutor
Please can you kindly assist me on the logic of exercising an option and not to exercise. Example 1 chapter 13 exercise 1 option holder holds a call option with exercise price of $1.80 in 3months tim. If in 3months share price is $2.50 they should exercise. Failing to understand where the benefit comes from if i buy at $2.50?
A call option gives you the right to buy.
So……if a share price is $2.50 but I have the right to buy it at only $1.80, then I will certainly buy it at $1.80 (because if I want to I could then sell it at $2.50 and make a nice profit 🙂 )
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