Suppose you purchase the November call option on orange juice futures with a strike price of 150 at the price shown in the table below. What will be your profit or loss on this contract if the price of orange juice futures is $0.616 per pound at expiration of the option contract?
Futures Options
Orange juice:
15,000 lbs, U.S. cents per lb.
A)loss of $2,107.50
B)loss of $1,717.50
C)no profit or loss
D)profit of $1,717.50
E)profit of $2,107.50

Question

Suppose you purchase the November call option on orange juice futures with a strike price of 150 at the price shown in the table below. What will be your profit or loss on this contract if the price of orange juice futures is $0.616 per pound at expiration of the option contract?
Futures Options
Orange juice:
15,000 lbs, U.S. cents per lb. 
A)loss of $2,107.50 
B)loss of $1,717.50 
C)no profit or loss 
D)profit of $1,717.50 
E)profit of $2,107.50

Quizplus · Accepted Answer

The call will be out of the money at expiration.Loss = initial cost of contract = 15,000 (14.05/100) = $2,107.50

Suppose You Purchase the November Call Option on Orange Juice