# Warren Co. purchased a call option on Echo common shares on Jan 7, 2020 for \$360....

Warren Co. purchased a call option on Echo common shares on Jan 7, 2020 for \$360. The call option is for 100 shares, and the strike price is \$85 (which equals the price of an Echo share on the purchase date). The following data are available with respect to the call option. Date Market price of Echo shares Time value of call option March 31, 2020 \$140 \$200 What is the net effect of these call options on Warren Co.'s income before taxes? \$5,000 a. Ob. \$160 O c. (\$5,000) d. \$5,340 \$4,840 e.

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• ### Warren Co. purchased a call option on Echo common shares on Jan 7, 2020 for \$360....

Warren Co. purchased a call option on Echo common shares on Jan 7, 2020 for \$360. The call option is for 100 shares, and the strike price is \$85 (which equals the price of an Echo share on the purchase date). The following data are available with respect to the call option. Date Market price of Echo shares Time value of call option March 31, 2020 \$135 \$160 What is the net effect of these call options on Warren Co.’s...

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