Topic: From your corporate finance course you may recall that debt gives corporations leverage. Options also can give investors leverage. Explain how that works. Consider a stocks that is $20 and you...

Impact of call Option on leverage
Leverage helps in boosting the profit and losses as the leverage will be two edge sword for the entity as leverage is a form of debt capital that can be taken by the various entity in order for managing the overall growth and capital structure (Adam Hayes and Margaret James 2020).
Similarly option also provides leverage to investors as the debt is used to create leverage in order to boost the profit. Option are popular type of leverage used by the retail investors who wish to give their portfolio a boost but on the other hand does not want to carry the risk included with the borrowing of money. Moreover call option uses the risk adjusted leverage which enables the investors in magnifying the return or loss on the sum invested. This can be best illustrated with the help of an example i.e. suppose in the month of august we buy a call for $300 which is currently trading...