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You purchase one MBI July 126 call contract (equaling 100 shares) for a premium of $15....

You purchase one MBI July 126 call contract (equaling 100 shares) for a premium of $15. You hold the option until the expiration date, when MBI stock sells for $135 per share. You will realize a ______ on the investment.

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Answer #1

Call Premium(C) = $15

Strike price (K) = $126

Stock price on expiration date (S) = $135

No . of stock in a call contract (n) = 100

Realized profit(R) on Call option can be computed with following equation:

You will realize a loss of $600 on investment

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