Question

You bought one of the $100 Apple call option contracts with a premium of $4.41. You kept your position until the expiration date, when Apple stock sells for $95, 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

Losses incurred during this transaction would be = -$4.41 per contract
In call option - If you buy Call option, you are bullish on the stock and you have to pay the premium.
If the stock price is > strike price call is exercised otherwise call is lapse if stock price below strike price.
If you are long on Call option Maximum Loss is the premium that you have paid and profit is unlimited.
In this case Stock price below strkie price, call is lapse you have the loss of the premium paid i.e $4.41

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