You own a call option on a stock and the strike price of the option is $30.The option has 3 weeks until expiration and the stock is currently priced at $35 per share.What is the largest payout possible for this call option? Ignore the original cost of the option for the payout calculation.

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Quizplus · Accepted Answer

There is an unlimited possible payout on this option because as the stock price continues to increase, the value of the call option will continue to increase as well. The option holder can exercise the option at the $30 strike price, and sell the shares at the higher market price, resulting in unlimited potential profit.

You Own a Call Option on a Stock and the Strike