Suppose you purchase a call option on Asset XYZ that has an exercise price of $50. The option price is $3 per share. Suppose that on the expiration date, the current price is $49. What is your net profit or loss per share?

Question

Quizplus · Accepted Answer

Since the exercise price is $50 and the current price is $49, the option is out of the money (OTM). Therefore, you would not exercise the option and your net loss would be the premium paid, which is $3 per share. So, your net profit or loss per share would be -$3.00.

Suppose You Purchase a Call Option on Asset XYZ That