You bought both a call and a put contract on ABC stock with a strike price of $30. Both expire on the same day. If the stock price at expiration is $32, you will _________ the call and _________ the put.
A) Exercise; exercise
B) Exercise; not exercise
C) Not exercise; exercise
D) Not exercise; not exercise
E) Exercise; continue to hold

Question

Quizplus · Accepted Answer

You will exercise the call option to buy the stock at $30 because the market price is $32, making a profit on the difference. You will not exercise the put option because the market price is above the strike price, making it unfavorable to sell the stock at $30.

You Bought Both a Call and a Put Contract on ABC