Answer to Question #127672 in Finance for hoololeni

Question

Suppose that the stock of the company CFAA is currently trading on April 15 at a price of $70. A call option with a strike price of $70 and an expiration date on October 15 is trading at $4. What is your profit if the stock price at expiration date is $80? Remember that each option contract is for 100 shares.

Answer 1

Profit = share price at expiration date - current share price - contract value=80-70-4=6