Allman, Inc, enters into a call option contract with Betts Investment Co on January 2, 2014 . This contract gives Allman the option to purchase 1,000 shares of Upmann stock at $100 per share. The option expires on April 30, 2014 . Upmann shares are trading at $100 per share on January 2, 2014, at which time Allman pays $200 for the call option. Using the information above, the 1,000 shares of
Upmann stock in this contract is referred to as the
a. collateral.
b. notional amount.
c. option premium.
d. derivative.
B
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