Bingo, Inc, enters into a call option contract with Racer Investment Co on January 2, 2014 . This contract gives Bingo the option to purchase 1,000 shares of Saloon stock at $100 per share. The option expires on April 30, 2014 . Saloon shares are trading at $100 per share on January 2, 2014, at which time Bingo pays $100 for the call option. Assume that the price per share of Saloon stock is $115
on April 30, 2014, and that the time value of the option has not changed. In order to settle the option contract, Bingo, Inc, would most likely
a. pay Racer Investment $15,000.
b. purchase the shares of Saloon at $100 per share and sell the shares at $115 per share to Racer.
c. receive $15,000 from Racer Investment.
d. receive $400 from Racer Investment.
C
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