You purchased eight LJK call option contracts with a strike price of $42.50 when the option was quoted at $.65. The option expires today when the value of LJK stock is $43.16. Ignoring trading
Costs and taxes, what is the total proﬁt or loss on your investment?
A) $.33
B) $2.40
C) $8.00
D) $12.50
E) $14.00

Question

Quizplus · Accepted Answer

The profit per option is the difference between the stock price and the strike price minus the option premium: ($43.16 - $42.50 - $0.65) = $0.01. Since each contract covers 100 shares, the total profit is $0.01 * 100 * 8 = $8.00.

You Purchased Eight LJK Call Option Contracts with a Strike