Calculation Of Profit Or Loss In Call And Put Options

Question

The market price of ABC stock has been very volatile and you think this volatility will continue for a few weeks. Thus, you decide to purchase a one-month call option contract on ABC stock with a strike price of $25 and an option price of $1.30.

You also purchase a one-month put option on ABC stock with a strike price of $25 and an option price of $.50. What will be your total profit or loss on these option positions if the stock price is $24.60 on the day the options expire?

A. -$180
B. -$140
C. -$100
D. $0
E. $180
F. None of the above

Summary

The question belongs to Finance and it discusses about calculating whether you earn profit or loss on investing in one-month call option and one-month put option on the stock of a company.

Total Word Count 70

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