You purchase one MBI July 120 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) $300 profit
D) $300 loss

Question

JustFor Reddit · Accepted Answer

Final Answer : B, Explanation :  Long call profit = Max [0, ($123 − $120)(100)] − $500 = −$200

You purchase one MBI July 120 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) $300 profit
D) $300 loss

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Learning Objectives

Related questions

You purchase one MBI July 120 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) $300 profitD) $300 loss

Definitions

Learning Objectives

Learning Objectives

Related questions

You purchase one MBI July 120 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) $300 profit
D) $300 loss