Question

Sample homework questions:

Given you are short 50 contracts on a 2-year 50-call options Apple. How much will your option position increase in value if Apple stock price goes down by $2 (use negative number if value decreases).

Answer 1

Short 50 contract
time 2 year
50 call option per contract
Total number of option = 50*50 = 2500
Short option = 2500
If Apple stock price goes down by $2 then it will be benefitted
for the call option on whicj the position is short.
Accordingly the gain will be $2.5
So total gain will be 2.5*2500 =	6250