Knowee
Questions
Features
Study Tools

You are long 1200 call options on the IVX stock with an exercise price of $50. You paid $0.045 per option. If the price of IVX stock at maturity is $52.5, what is the profit on your position? a) –$54 b) $540 c) $54 d) –$540

Question

You are long 1200 call options on the IVX stock with an exercise price of 50.Youpaid50. You paid 0.045 per option. If the price of IVX stock at maturity is 52.5,whatistheprofitonyourposition?a)–52.5, what is the profit on your position? a) –54 b) 540c)540 c) 54 d) –$540

🧐 Not the exact question you are looking for?Go ask a question

Solution

To calculate the profit on your position, we need to determine the difference between the stock price at maturity and the exercise price.

The stock price at maturity is given as 52.5,andtheexercisepriceis52.5, and the exercise price is 50.

The difference between the two is 52.5−52.5 - 50 = $2.5.

Since you are long 1200 call options, each option represents 100 shares of stock.

Therefore, the total number of shares represented by your options is 1200 * 100 = 120,000 shares.

To calculate the profit, we multiply the difference in stock price by the number of shares represented by the options:

Profit = 2.5∗120,000=2.5 * 120,000 = 300,000.

However, you paid $0.045 per option, so we need to subtract the cost of the options from the profit:

Profit = 300,000−(300,000 - (0.045 * 1200 * 100) = 300,000−300,000 - 5,400 = $294,600.

Therefore, the profit on your position is $294,600.

The correct answer is not provided in the options given.

This problem has been solved

Similar Questions

An investor purchases a put option for a put premium of $4, with an exercise price of $30. The stock is currently priced at $29, and rises to $32 on the expiration date. What is the profit per unit to the investor on the expiration date?Select one:a. -$4b. $2c. -$2d. $4

Calculate the value of a long call if the exercise price is $160.4, the premium is $80.2 and the spot price is $186.0.Question 4Answera.105.80b.-80.20c.-54.60d.-240.60e.-160.40

A one-year call option on a stock with a strike price of $30 costs $3; a one-year put option on the stock with a strike price of $30 costs $4. Suppose that a trader buys two call options and one put option. The breakeven stock price above which the trader makes a profit is:$35$40$30$36

Select the correct answer 13 of the total of an article is sold at a profit of 15%, 14 is at a profit of 20% and the remained part is at a profit of 24%. If the total profit is Rs.6,240 find the cost price of the article?OptionsRs.31000Rs.35000Rs.32000Rs.

A trader sells a television for $880 at a profit of 25%. If the profit percentage is to be increased to 40%, what should be the new selling price (approximately)? Options $920 $986 $960 $1040

1/3

Upgrade your grade with Knowee

Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.