You bought a call option with a strike price of $30. What is your total payoff on this option contract if the underlying stock is selling for $31.50 on the option expiration date?
A)$1.50
B)$15.00
C)$150.00
D)$270.00
E)$1,500.00

Question

Quizplus · Accepted Answer

The payoff on a call option is the difference between the stock price and the strike price, as long as the stock price is greater than the strike price. In this case, the stock is selling for $31.50, which is $1.50 higher than the strike price of $30. Therefore, the payoff is $1.50 per share. Since one option contract typically covers 100 shares, the total payoff would be $150.00.

You Bought a Call Option with a Strike Price of $30