You purchase 20 call option contracts with a strike price of $110 and a premium

Question

You purchase 20 call option contracts with a strike price of $110 and a premium of $1.85. Assume the stock price at expiration is $119.12.

What is your dollar profit? (Do not round intermediate calculations. Omit the "$" sign in your response.)

What if the stock price is $105.07? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Omit the "$" sign in your response.)

What is your dollar profit? (Do not round intermediate calculations. Omit the "$" sign in your response.)

Explanation / Answer

Profit on expiration = 119.12-110-1.85 i.e 7.27

Total profit = 7.27*20 i.e 145.40

2) If the stock price on expiry is 105.07 there will be a loss of premium paid i.e 1.85 per option

Total loss = 1.85*20 i.e 37

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