A Trader Purchases 10 BHP Call Options,each Contract Being for 1,000

question 9

Multiple Choice

A trader purchases 10 BHP call options,each contract being for 1,000 BHP Billiton shares,at a strike price of $32.20.The trader then closes out the position when the market price for BHP Billiton shares is $32.50.What has been the change in the trader's wealth position?

• A)The trader made a loss of $300 ignoring transaction costs.
• B)The trader made a profit of $300 ignoring transaction costs.
• C)The trader made a loss of $3,000 ignoring transaction costs.
• D)The trader made a profit of $3,000 ignoring transaction costs.

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