Marcie Purchases a Call Option on Interest Rate Futures with an Exercise

question 12

Multiple Choice

Marcie purchases a call option on interest rate futures with an exercise price of 92-10. The premium on the call option is 2-24. Just before the expiration date, the price of Treasury bond futures is 97-14. At this time, Marcie decides to exercise the option and closes out the position by selling an identical futures contract. Marcie's net gain from this strategy is $____.

• A) -2,687.50
• B) 2,687.50
• C) 2,375.00
• D) 7,437.50
• E) none of the above

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House of Representatives

The lower chamber of the United States Congress, where members are elected to represent geographical districts for a two-year term.

Fourteenth Amendment

An amendment to the U.S. Constitution, ratified in 1868, granting citizenship to all persons born or naturalized in the United States, including former slaves, and guaranteeing all citizens equal protection of the laws.

Abolitionist Movement

A historic movement aimed at ending slavery and the slave trade, prominent in the 18th and 19th centuries, particularly in the United States and Great Britain.