Jay writes a call option with a strike price of $50.What will Jay's payoff be if the underlying asset price at expiration is $55?
A)$5
B)−$5
C)0
D)$105

Question

Quizplus · Accepted Answer

If the underlying asset price at expiration is $55, Jay's call option is in-the-money by $5 ($55 - $50). However, since Jay wrote (sold) the call option, he has to pay the option holder the difference in price, resulting in a payoff of -$5.

Jay Writes a Call Option with a Strike Price of $50.What