Which of the lines is a graph of the profit at maturity of writing a call option on €62,500 with a strike price of $1.20 = €1.00 and an option premium of $3,125?
A)A
B)B
C)C

Question

Which of the lines is a graph of the profit at maturity of writing a call option on €62,500 with a strike price of $1.20 = €1.00 and an option premium of $3,125? 
A)A 
B)B 
C)C

Quizplus · Accepted Answer

The graph that shows the profit at maturity of writing a call option on €62,500 with a strike price of $1.20 = €1.00 and an option premium of $3,125 is line B. This is because the profit at maturity from writing a call option is limited to the premium received, which in this case is $3,125. Therefore, the profit line should be a horizontal line at $3,125, which is represented by line B. Lines A, C, and D all show different types of option positions and do not represent the profit at maturity from writing a call option with the given parameters.

Which of the Lines Is a Graph of the Profit