MBAA 517 – Suppose a European call option to buy a share for $120.00

MBAA 517 – Suppose a European call option to buy a share for $120.00

Subject: Business    / Finance
Question
Suppose a European call option to buy a share for $120.00 costs $6.00. The stock currently trades for $118.00. If the option is held to maturity under what conditions does the holder of the option make a profit? Note: ignore time value of money.