Question

# You buy 300 shares of ABC stock at \$53 per share. At the same time, you...

You buy 300 shares of ABC stock at \$53 per share. At the same time, you write 300 call options on ABC stock with exercise price equal to \$51 and call premium \$6.92. Calculate your profit if ABC stock price at the expiration of the option is \$48.06 per share.

 A. \$594 B. -\$594 C. -\$1,482 D. \$1,482 E. \$692

You buy 320 call options with exercise price of \$72 and call premium of \$6.50. You write 640 call options with exercise price of \$75 and call premium of \$4.10. You also buy 320 call options with exercise price of \$78 and call premium of \$2.90. All the options have the same underlying asset and expire on the same date. Calculate the profit of your strategy if the stock price at expiration is equal to \$76.70.

 A. \$40 B. \$44 C. \$36 D. \$32

 Premium received \$ 2,076.00 (300*6.92) Loss on stock \$ 1,482.00 (53-48.06)*300 Profit \$     594.00

Hence option A is correct

 Per option Total Profit 320 call 72 \$        -1.80 \$   -576.00 Profit 640 call 75 \$          2.40 \$ 1,536.00 Profit 78 call \$        -2.90 \$   -928.00 \$       32.00

Hence option D is correct

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