Josh owns 2 call options on Foster Glass stock. The exercise price is $47.50 and the stock price at expiration is $49.01. What is the total payoff on the option contracts?
A)$0
B)−$3.02
C)$3.02
D)$30.20
E)$302.00

Question

Quizplus · Accepted Answer

The payoff for one call option is the stock price at expiration minus the exercise price, which is $49.01 - $47.50 = $1.51. Since Josh owns 2 call options, the total payoff is 2 * $1.51 * 100 (since each option contract typically covers 100 shares), which equals $302.00.

Josh Owns 2 Call Options on Foster Glass Stock