The Market Price of ABC Stock Has Been Very Volatile

question 50

Multiple Choice

The market price of ABC stock has been very volatile and you think this volatility will continue for a few weeks. Thus,you decide to purchase a one-month call option contract on ABC stock with a strike price of $25 and an option price of $1.30. You also purchase a one-month put option on ABC stock with a strike price of $25 and an option price of $.50. What will be your total profit or loss on these option positions if the stock price is $24.60 on the day the options expire?

• A) -$180
• B) -$140
• C) -$100
• D) $0
• E) $180

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