You Purchase a Call Option on a Stock

question 21

Multiple Choice

You purchase a call option on a stock. The profit at contract maturity of the option position is ________, where X equals the option's strike price, S_T is the stock price at contract expiration, and C₀ is the original purchase price of the option.

• A) max (−C₀, S_T − X − C₀)
• B) min (−C₀, S_T − X − C₀)
• C) max (C₀, S_T − X + C₀)
• D) max (0, S_T − X − C₀)

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