You purchased five TJH call option contracts with a strike price of $40 when the option was quoted at $1.30.The option expires today when the value of TJH stock is $41.90.Ignoring trading costs and taxes,what is your total profit or loss on your investment?

Question

Quizplus · Accepted Answer

Each option contract represents 100 shares. The profit per share is the difference between the stock price and the strike price minus the option premium: ($41.90 - $40.00 - $1.30) = $0.60. For 5 contracts, the total profit is 5 * 100 * $0.60 = $300.

You Purchased Five TJH Call Option Contracts with a Strike