Question

You wrote one of the $100 Apple call option contracts with a premium of $10.00. You kept your position until the expiration date, when Apple Stock has a market value of $117.00, at that point you have a profit of $_____________ from this transaction. Recall that each contract includes 100 shares.  Enter a negative number for losses. Enter your answer in the box below. Round your answer to two decimals.

Answer 1

Loss of this transaction is -$7
Write a call option means selling a call option.
Selling a call option means you are bearish on the stock price, if the stock price is below strike price call is lapse you enjoy.
If the stock price is above the strike price call is exercised you have the pay the difference between stike price and stock price.
Selling a call option is a enjoying a limited profit and suffer a unlimited loss.
Payoff = 100 - 117 = -17
Loss = -17 + 10 = - 7

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