You purchase 5 call option contracts on ABC stock with a price of $3.26 and a strike price of $45. At expiration, the stock price is $51.24. What is your payoff?
A) $3,120
B) $1,630
C) $1,080
D) $1,490
E) $2,460

Question

Quizplus · Accepted Answer

The payoff from a call option is calculated as [(Stock Price at Expiration - Strike Price) * Number of Contracts * 100] - Initial Cost of the Contracts. Here, it is [(51.24 - 45) * 5 * 100] - (3.26 * 5 * 100) = $3,120.

You Purchase 5 Call Option Contracts on ABC Stock with a Price