Calls on the King Co. closed trading at 2 5/8. You bought 3 call contracts at the close. The cost of 3 call options were:
A) $2.6255 plus brokerage fees, etc.
B) $7.875 plus brokerage fees, etc.
C) $262.50 plus brokerage fees, etc.
D) $787.50 plus brokerage fees, etc.

Question

Quizplus · Accepted Answer

Each call option contract typically represents 100 shares of the underlying stock. The closing price of 2 5/8 is equivalent to $2.625. Therefore, the cost for one contract is $2.625 * 100 = $262.50. For 3 contracts, the cost is $262.50 * 3 = $787.50.