Question

An investor sold one ABC $25 (exercise price is $25) call contract for a premium of...

An investor sold one ABC $25 (exercise price is $25) call contract for a premium of $5 per share. At the maturity (expiration), ABC stock price is $40.

Which is the net profit/loss of this investment?

a) $1000   

b) $0  

c) -$1000  

d) -$500

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You purchase one ABC Inc. July 125 call contract for a premium of $5. You hold...
You purchase one ABC Inc. July 125 call contract for a premium of $5. You hold the option until the expiration date, when ABC Inc. stock sells for $123 per share. How much will you realize on the investment?
An investor purchases one call option (strike price $43 and premium $1.20) and purchases 3 put...
An investor purchases one call option (strike price $43 and premium $1.20) and purchases 3 put options (strike price $43 and premium $1.65) on the same underlying stock. What is the investor's total profit or loss (enter profit as positive or a loss as a negative value) per share if the stock price at expiration is $21.15?
You purchase one SDB $125 strike price call contract (equaling 100 shares) for a premium of...
You purchase one SDB $125 strike price call contract (equaling 100 shares) for a premium of $5. You hold the option until the expiration date, when SDB stock sells for $123 per share. What will be your payoff at expiry? What will be your profit/loss? You write one SDB $120 strike price put contract (equaling 100 shares) for a premium of $4. You hold the option until the expiration date, when SDB stock sells for $121 per share. What will...
Suppose the current price of a share of ABC stock is $188. You buy a call...
Suppose the current price of a share of ABC stock is $188. You buy a call option (June 2020 expiration date and $190 strike price) on ABC stock at a call premium of $4. If the price of ABC stock on the expiration day is $189, the payoff and profit of your investment on the call option will be: A. $1 (payoff) and $3 (profit) B. $1 (payoff) and $5 (profit) C. $1 (payoff) and -$3 (profit) D. $0 (payoff)...
22. You have written one July 123 call contract on XRI stock for a premium of...
22. You have written one July 123 call contract on XRI stock for a premium of $9. You hold the option until the expiration date, when XIR stock sells for $127 per share. You will realize a ______ on the investment. Multiple Choice A $500 profit B $1,300 loss C $400 loss D $400 profit 23. The spot price for S&P100 is $1,700. The dividend yield on the S&P 100 is 4.8%. The risk-free interest rate is 5.8%. The futures...
You sold fifty put contracts (1 contract = 100 shares) on ABC stock at an option...
You sold fifty put contracts (1 contract = 100 shares) on ABC stock at an option premium of $0.80. The options have an exercise price of $30. The options were exercised today when the stock price was $28.75 a share. What is your net profit or loss on this investment assuming that you closed out your positions at a stock price of $28.75? Ignore transaction costs and taxes As you were not sure if the price of ABC stock would...
You buy one IBM July 90 call contract for a premium of $4 each share and...
You buy one IBM July 90 call contract for a premium of $4 each share and one put contract for a premium of $2 each share. You hold the position until the expiration date when IBM stock sells for $98 per share. What is your total profit or loss? Remember each contract has 100 shares? I got 200, is this correct?
You own one call option contract on Dell Computer with an exercise price of $45 and...
You own one call option contract on Dell Computer with an exercise price of $45 and a remaining maturity of three months. The current price of Dell is $50 per share and the risk-free rate of interest is 5 percent per year with continuous compounding. Dell does not pay dividends and does not expect to do so in the near future. Answer the following questions. a. Prove that it would never be optimal to exercise your Dell call option contract...
Homework Question 1) Currently a call contract with an exercise price of $10 on a share...
Homework Question 1) Currently a call contract with an exercise price of $10 on a share of List Aerospace’s common stock is selling for (that is, its premium is) $2. What would the profit or loss graph (similar to that in Figure 20.5 See PowerPoint) look like for this option? In drawing this graph, assume that the option is being evaluated on its expiration date. What are the maximum profits, maximum losses, and the break-even point? How would this graph...
Investor A sells a three-month European call option on 100 shares of a stock with a...
Investor A sells a three-month European call option on 100 shares of a stock with a strike price of $40 per share and collects a total of pays a total of $500 premium. Investor B longs a 3-month forward contract on100 shares of the same stock at a forward price of $40 per share. At which stock price in three months will these two investors have the same profit or loss? (please enter only a number without the $ sign)
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT