Suppose You Own a Call Option on a Share with a Strike

question 65

Multiple Choice

Suppose you own a call option on a share with a strike price of $20 that expires today. The price of the underlying share is $15. If you exercise the option and immediately sell the share:

• A) you will earn $5.
• B) you will lose $5.
• C) you will lose $15.
• D) you will earn $15.

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Definitions:

Operations Management

The aspect of management dedicated to the design, administration, and supervision of the manufacturing process, along with the modification of business operations in the generation of products or services.

Nineteenth Century

The Nineteenth Century is the period from 1801 to 1900, characterized by significant industrial, cultural, and political changes worldwide.

Interchangeable Parts

Components designed to be exactly similar so they can be easily replaced or assembled without customization.

Manufacturing

The process of producing goods by transforming raw materials into finished products, using labor, machinery, and chemical processing.