You purchase a call option on a stock. The profit at contract maturity of the option position is ________, where X equals the option's strike price, S_T is the stock price at contract expiration, and C₀ is the original purchase price of the option. A) max (−C₀, S_T − X − C₀) B) min (−C₀, S_T − X − C₀) C) max (C₀, S_T− X + C₀) D) max (0, S_T − X − C₀)

Question

Quizplus · Accepted Answer

The Answer of You purchase a call option on a stock. The profit at contract maturity of the option position is ________, where X equals the option's strike price, S_T is the stock price at contract expiration, and C₀ is the original purchase price of the option. A) max (−C₀, S_T − X − C₀) B) min (−C₀, S_T − X − C₀) C) max (C₀, S_T− X + C₀) D) max (0, S_T − X − C₀)

You Purchase a Call Option on a Stock