Assume That You Have Purchased a Call Option with a Strike

question 3

Multiple Choice

Assume that you have purchased a call option with a strike price $60 for $5. At the same time, you purchase a put option on the same stock with a strike price of $60 for $4. If the stock is currently selling for $75 per share, calculate the dollar return on this option strategy.

• A) $10
• B) -$4
• C) $5
• D) $6
• E) $15

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Definitions:

Oedipus Complex

According to Freud, a boy’s intense desire to replace his father and enjoy the affections of his mother.

Affections

The feelings of fondness or liking directed toward someone or something.

Mother

A female parent who may also play a pivotal role in child-rearing and emotional nurturing.

Aggression

Behavior intended to harm or intimidate others, which can be physically or verbally expressed.