Suppose You Purchase One IBM May 100 Call Contract at $5

question 19

Multiple Choice

Suppose you purchase one IBM May 100 call contract at $5 and write one IBM May 105 call contract at $2.If,at expiration,the price of a share of IBM stock is $103,your profit would be

• A) $500.
• B) $300.
• C) zero.
• D) $100.
• E) none of these.

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Definitions:

Right of Return

The right of return is a policy that allows customers to return purchased goods within a specified period for a refund, exchange, or credit.

Sales Revenue

Income earned from the sale of goods or services before any expenses are deducted.

Refund Liability

Refund liability refers to the obligation a company has to return money to its customers for products or services that were returned, canceled, or unsatisfactory.

Freight Costs

Expenses associated with transporting goods from one location to another.