You purchased five WXO 30 call option contracts at a quoted price of $.34.What is your total profit on this investment if the price of WXO is $33.60 on the option expiration date?
A)$170
B)$326
C)$1,630
D)$1,440
E)$1,576

Question

Quizplus · Accepted Answer

Each call option contract typically represents 100 shares. The strike price of the options is $30, and the price of WXO on expiration is $33.60, meaning each option is in the money by $3.60 ($33.60 - $30.00). For five contracts, this equates to a total intrinsic value of $1,800 (5 contracts x 100 shares per contract x $3.60). However, the initial cost of purchasing these options was $.34 per share, or $34 per contract, totaling $170 for all five contracts (5 contracts x $34). Therefore, the net profit is the total intrinsic value minus the initial cost, which is $1,800 - $170 = $1,630.

You Purchased Five WXO 30 Call Option Contracts at a Quoted