You Wrote Five Call Option Contracts on MNO Stock with a Strike

question 72

Multiple Choice

You wrote five call option contracts on MNO stock with a strike price of $25 and an option price of $.70.What is your total net profit or loss on all transactions related to this investment if the price of MNO is $24.70 on the option expiration date? Ignore taxes and transaction costs.

• A)−$500
• B)$350
• C)−$350
• D)$500
• E)$425

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Definitions:

Financial Break-Even

The point at which total revenues and total expenses are equal, leading to a net income of zero.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in revenue, indicating the degree to which a firm can increase operating income by increasing sales.

Severe Damage

Refers to extensive physical harm or destruction to property, objects, or systems.

Economy Turn

A term possibly meant to describe a significant change or pivot in the economic conditions or trends.