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Solution Library
Calculation Of Profit Or Loss In Call And Put Options
Question
The market price of ABC stock has been very volatile and you think this volatility will continue for a few weeks. Thus, you decide to purchase a one-month call option contract on ABC stock with a strike price of $25 and an option price of $1.30.
You also purchase a one-month put option on ABC stock with a strike price of $25 and an option price of $.50. What will be your total profit or loss on these option positions if the stock price is $24.60 on the day the options expire?
A. -$180
B. -$140
C. -$100
D. $0
E. $180
F. None of the above
Summary
The question belongs to Finance and it discusses about calculating whether you earn profit or loss on investing in one-month call option and one-month put option on the stock of a company.
Total Word Count 70
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