What would be the profit or loss per share of stock to an investor who bought an October expiration Apple call option with an exercise price of $130 if Apple closed on the expiration date at $120? Assume the option premium was $3.00.
A) $0
B) $3.00 gain
C) $3.00 loss
D) $7.00 gain

Question

Quizplus · Accepted Answer

If the investor bought an October expiration Apple call option with an exercise price of $130 and Apple closed on the expiration at $120, then the option would expire worthless because the current market price of Apple is lower than the exercise price of the option. Therefore, the loss per share of stock would be the option premium of $3.00. Hence, the best choice is C.

What Would Be the Profit or Loss Per Share of Stock