Kevin asked:


There’s a test in my Finance class tomorrow and guess who discovered he had the wrong book!

Anyway, I went to investopedia and cruised through the book I DO have and couldn’t find how to calculate the Stock Market Return OR how to find the profit per share from exercising a stock option.

I assume the exercised option is just the current price minus the option price, but I have no clue about the SMR.

Thanks!

BRADY

3 Responses to “How to find the Stock Market Return & profit per share from exercising the option?”

1. Roman on December 25th, 2009 1:28 am

   Most popular tool for smr and profit is here

2. fast trade on December 28th, 2009 11:49 am

   Hi,I suppose The stock market return is nothing but the profit you earn on your investment now the next part.
   Only In The Money option can be exercised. so
   eg. If you have bought an option of xyz stock when the stock trading @ 100/- and you paid the premium of 5/- for it hence you total cost is 100+5 = 105. now you can exercise the option once the stock price is above 100 but to make profit the stock price should be above your total cost ie 105. so if the stock price reaches @ 110 and you exercise you option your profit is 110-100(buying price)= 10 -5 (less premium paid)= 5 is the net profit. and this is the return you earned on your investment.

3. raysor on December 29th, 2009 11:59 am

   The option has a strike price. This is what you pay when you exercise. So add the option premium (what you paid for it). The difference between these two amounts and the share price is your profit or loss (disregarding costs).