What is the worst-case profitability scenario for an investor who sold a call on the firm's stock for a premium of $10 and a strike price of $100?
A) $90 per share profit
B) $10 per share profit
C) $0 per share profit
D)Unlimited losses

Question

Quizplus · Accepted Answer

When an investor sells a call option, they are obligated to sell their shares if the stock price goes above the strike price. If the stock price rises significantly, the investor could lose a substantial amount of money, even beyond the premium they received for selling the call option. Therefore, the worst-case profitability scenario for an investor who sold a call option is unlimited losses.

What Is the Worst-Case Profitability Scenario for an Investor Who