An investor longs a $65 strike call at $1.20, and shorts a $65 strike put at $0.90. If at expiration of the options, the investor wishes to own the security, what is the net cost of the position?

Question

Quizplus · Accepted Answer

The net cost is calculated by adding the strike price to the net premium paid. The investor pays $1.20 for the call and receives $0.90 for the put, resulting in a net premium of $0.30. Adding this to the $65 strike price gives a total cost of $65.30.

An Investor Longs a $65 Strike Call at $1