You Sold One Call Option Contract with a Strike Price

question 357

Multiple Choice

You sold one call option contract with a strike price of $42.50 when the option was quoted at $1.10. The option expires today when the value of the underlying stock is $38.10. Ignoring trading costs and taxes, what is your net profit or loss on your investment?

• A) -$550
• B) -$110
• C) $0
• D) $110
• E) $550

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Definitions:

Authority

The legitimate power given to an individual or organization to make decisions, enforce obedience, and implement policies.

Final Choice

The ultimate decision made after considering all options and outcomes.

Routine Decisions

Decisions that are made frequently, following established policies or procedures with predictable outcomes.

Momentous Decisions

Decisions of great importance or significance, often having far-reaching consequences.