You Buy an S & P 500 Index Call Option

question 13

Essay

You buy an S & P 500 Index Call Option for 15.The strike price is 1250.If the index closes at $1,290,what is you total profit?

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Definitions:

Marginal Cost

The added expense from the production of one additional unit of a product or service.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units.

Profitable

A financial status where the income or revenue generated exceeds the costs or expenses, resulting in a financial gain.

Natural Monopoly

A market where a single supplier can produce output at a lower cost than multiple competitors, often due to economies of scale.