Katie purchased 6 call options on Atlas Co. stock with a strike price of $40. On the expiration date, the stock was priced at $38.95 a share. What is the total payoff on the option contracts?
A)−$220.00
B)−$55.00
C)$0
D)$2.20
E)$55.00

Question

Quizplus · Accepted Answer

Since the stock price at expiration ($38.95) is below the strike price ($40), the call options are out of the money and will not be exercised. Therefore, the total payoff is $0.

Katie Purchased 6 Call Options on Atlas Co