If an Investor Buys a 100-Share Call Option for $300

question 144

Multiple Choice

If an investor buys a 100-share call option for $300 with an exercise price of $30 and the underlying price per share of the stock at expiration is $32, what is the amount of profit or loss, ignoring brokerage fees?

• A) There would be a profit of $200.
• B) There would be a profit of $100.
• C) There would be a loss of $100.
• D) There would be a loss of $300.

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Definitions:

Integral Role

A crucial function or part played by a component within a system or process.

Communication Vehicle

A medium or channel through which information, messages, or data are transmitted from a sender to a receiver.

Exert Leverage

The act of using one's advantage or influence to affect or sway outcomes in a desired way.

Particular Negotiation

A negotiation that is specific to a certain context, situation, or set of circumstances.