You sell a call with a strike price of $90 and a premium of $3.84. You simultaneously purchase the stock at a $90 price. If the stock price at expiration is $84.17, what is your profit per share from this transaction?
A) -$3.84
B) -$1.99
C) $1.62
D) -$5.83
E) $1.99

Question

Quizplus · Accepted Answer

If the stock price at expiration is $84.17, the option will not be exercised and you will keep the premium of $3.84. However, you will have a loss of $90 - $84.17 = $5.83 from purchasing the stock. Therefore, your profit per share is ($3.84 - $5.83) = -$1.99.

You Sell a Call with a Strike Price of $90