You purchase one MBI July 125 call contract (equaling 100 shares) for a premium of $5. You hold the option until the expiration date, when MBI stock sells for $123 per share. You will realize a ________ on the investment.

A) $200 profit
B) $200 loss
C) $500 profit
D) $500 loss

Question

Danji David · Accepted Answer

Final Answer : D, Explanation :  Long call profit = Max [0, ($123 − $125)(100)] − $500 = −$500

You purchase one MBI July 125 call contract (equaling 100 shares) for a premium of $5. You hold the option until the expiration date, when MBI stock sells for $123 per share. You will realize a ________ on the investment.

A) $200 profit
B) $200 loss
C) $500 profit
D) $500 loss

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Learning Objectives

Related questions

You purchase one MBI July 125 call contract (equaling 100 shares) for a premium of $5. You hold the option until the expiration date, when MBI stock sells for $123 per share. You will realize a ________ on the investment.A) $200 profitB) $200 lossC) $500 profitD) $500 loss

Definitions

Learning Objectives

Learning Objectives

Related questions

You purchase one MBI July 125 call contract (equaling 100 shares) for a premium of $5. You hold the option until the expiration date, when MBI stock sells for $123 per share. You will realize a ________ on the investment.

A) $200 profit
B) $200 loss
C) $500 profit
D) $500 loss