You purchase one MBI July 120 Call contract for a $5 premium. 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
B. $200 loss
=Contract Price + premium
=120+5
=125
Loss= Market price on expiration date- purchase price
=125-123
=2
=2*100
=200 loss
Long Call Profit = Max[0,($123 - $120)(100)] - $500 = -$200