Katie Purchased 4 Call Options on Atlas Co

question 94

Multiple Choice

Katie purchased 4 call options on Atlas Co. stock with a strike price of $37.00. On the expiration date, the stock was priced at $36.95 a share. What is the total payoff on the option contracts?

• A) -$220
• B) -$55
• C) $0
• D) $2.20
• E) $55

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Definitions:

Dividends Payable

A liability recorded when a company declares dividends but has not yet paid them to shareholders.

Cash Payments

Outflows of cash made by a business, including expenses, creditor payments, and other liabilities, during a specific period.

Statement of Cash Flows

It's a financial document summarizing the total cash entering a company from operational earnings and investment revenues, as well as the cash spent on business-related activities and investment outlays during a specific period.

Operating Activities

Business activities related to the day-to-day operations that generate revenue, such as sales and purchasing of inventory.