A call option was purchased last month for $2.50 with an exercise price of $45. The option is exercised when the market price of the stock is $48. What is the net profit or loss to the investor?
A) $3.00
B) $2.50
C) $0.50
D) $0.60

Question

Quizplus · Accepted Answer

The net profit is calculated by subtracting the cost of the option from the gain. The gain is the difference between the market price and the exercise price: $48 - $45 = $3. The cost of the option was $2.50, so the net profit is $3 - $2.50 = $0.50.

A Call Option Was Purchased Last Month for $2