Allen has been investing in the stock market for quite some time and had some success with equity investments.Recently a friend suggested that he start to use options in his portfolio as a means to increase his returns.Allen decided to purchase a March 2009 expiration call option on Stock X which carried an exercise price of $500 that was selling for $15.Two weeks later shares of Stock X were trading for $480.6.Now that the stock price is lower than the purchase price the options are worthless.However when Allen waited an additional two weeks the stock price climbed to $510.Allen feeling a bit of anxiety decides to exercise the option and realize some gains.