If an investor buys a call with a strike price of $90 and the underlying stock at the time of expiration is $96, what is her profit or loss per share if she paid the writer $4 a share?
A) $2
B) $1
C) -$1
D) -$2

Question

Quizplus · Accepted Answer

Assuming the investor exercises the call option, she would have the right to buy the stock at the strike price of $90 and then sell it at the market price of $96. Her profit per share would be $6. However, since she paid the writer $4 per share for the option, her net profit per share would be $2 ($6 profit - $4 premium paid).

If an Investor Buys a Call with a Strike Price