Sally Jameson

1194 WordsOct 16, 20125 Pages
Sally Jameson Case Study Thomas Virolle Pablo Méndez Question 1 If we ignore tax considerations and assume that Sally Jameson is free to sell her options at any time after she joins Telstar she has several chooses. She can either choose to take the cash bonus, either take the options and sell it, or she can take the option and keep it until it is worth use. Let’s compare the situations : 1- She takes the cash bonus and decide to invest it in a 5-year bond which rate is 6,02%. So at the end she will win 5310$ (=5000*1,0602). 2- She takes the options in order to sell it. Let’s assume that it is easy to find someone who want to buy the option at the value of the call option. Seeing the exhibit 3, the standard…show more content…
Even if the possibility of going higher than 35 is almost none, it could happen and it even can go higher than 45, if it is the case you are covered. If the price is 45 you will exercise you call on the 35 option and then you will have to sell it at 45 to the holder of the option that you sold. She can also buy options from another company in the CBOT to get cover from the possible result of Telstar. She can work on her own Portfolio of option and try to cover herself of the risk by
Open Document