You Purchased One SPX Call Option with a Strike of 1,500.You

question 68

Multiple Choice

You purchased one SPX call option with a strike of 1,500.You wrote one SPX call option with the same maturity date and a strike of 1,450.At maturity,what is your payoff if the S&P 500 is at 1,475?

• A) -$2,500
• B) -$250
• C) $25
• D) $250
• E) $2,500

---

Definitions:

Improved Liquidity

Refers to an increase in the ease with which assets can be converted into cash without a significant loss in value.

Stock's Expected Price

An estimate of the future price of a stock based on earnings forecasts, market trends, and other factors.

Target Capital Structure

The optimal mix of debt, equity, and other sources of financing that a company aims to achieve for minimizing cost of capital and maximizing value.

Residual Dividend Policy

A strategy where dividends are paid to shareholders after all project and operational expenses, and planned investments are covered.