You purchase a SXO index call option with a strike price of 1,200 and a premium of $17. What is your profit if the S&P Canada 60 index is 1,253 at expiration? The multiplier used for SXO is $100.
A) $5,300
B) $360
C) $530
D) $3,600
E) $5,283

Question

Quizplus · Accepted Answer

To calculate the profit, first we need to calculate the breakeven point:
Breakeven Point = Strike Price + Premium
Breakeven Point = 1,200 + 17
Breakeven Point = 1,217

As the S&P Canada 60 index is 1,253 at expiration, the call option is in-the-money by 33 points (1,253 - 1,200).

Profit = (Final Index Level - Strike Price) x Multiplier - Premium
Profit = (1,253 - 1,200) x $100 - $17
Profit = $3,600

You Purchase a SXO Index Call Option with a Strike