You Sell an IBM Call Option for $4

question 1

Multiple Choice

You sell an IBM call option for $4.The strike price of the option is $120,and the maturity is one year.At maturity,the price of the IBM stock is $126.Your profit/loss over the entire transaction is:

• A)$3 profit
• B)$2 loss
• C)$6 loss
• D)$4 profit

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Definitions:

Supply Curve

a graphical representation showing the relationship between the price of a good and the quantity supplied.

Decrease in Supply

A downward shift in the supply curve, representing a reduction in the quantity of a good or service available at any given price.

Pizza Sauce

A tomato-based sauce often used as a foundational ingredient in pizza preparation.

Increase in Price

A situation where the cost of a product or service rises over time or as a result of demand and supply dynamics.