You purchased a call option with a $22.50 strike price and a call premium of $0.30. On the expiration date, the underlying stock was priced at $23.40 per share. What is the percentage return on your investment?
A) -100 percent
B) 0 percent
C) 50 percent
D) 100 percent
E) 200 percent

Question

Quizplus · Accepted Answer

The intrinsic value of the option at expiration is $23.40 - $22.50 = $0.90. The profit is $0.90 - $0.30 = $0.60. The percentage return is ($0.60 / $0.30) * 100% = 200%.

You Purchased a Call Option with a $22