You Purchased a Stock for $60 a Share and Simultaneously

question 51

Multiple Choice

You purchased a stock for $60 a share and simultaneously wrote a covered call with a strike price of $70 on the stock. The call was selling for $0.50 at that time. Just prior to expiration, the
Stock was selling for $72 a share. What was your gain or loss per option share on this
Transaction?

• A)$60.50 loss
• B)$0.50 loss
• C)$10.50 gain
• D)$12.50 gain

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Definitions:

Market Movements

The collective shifts and trends observed in the pricing and valuation of securities within financial markets.

Earnings Potential

The maximum amount of money an individual or entity can expect to earn from their investments or job over a specific period.

Systematic Risk

The risk inherent to the entire market or market segment, also known as non-diversifiable risk or market risk.

Slope

In linear regression, the slope indicates the steepness and direction of the relationship between two variables, representing the amount of change in the dependent variable for a one-unit change in the independent variable.