What Is the Option Buyer's Total Profit or Loss Per

question 18

Multiple Choice

What is the option buyer's total profit or loss per share if a call option is purchased for a $5 premium, has a $50 exercise price, and the stock is valued at $53 at expiration?

• A)($5)
• B)($2)
• C)$3
• D)$8 Value of call option = stock price - exercise price
• Total profit of call = value of call option - premium paid
• Then:
• Value of call option = $53 - 50 = $3

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